One of the first questions most recent graduates are concerned with is “how do I go pay back my student loan?”. All that ‘free’ money you’ve been seeing coming into your account over the last few years suddenly stops coming in and instead you have to start thinking about giving it all back again (and then some!). The majority of university students do use their Student Finance loan Student Finance Loan – both maintenance and for their tuition fees. However, most students have had no education about how or when to pay it back. We don’t think this seems very fair so here we try and explain paying back your student loan.

Don’t panic

First of all – there is absolutely no need to panic. Yes, you have to pay the money back and yes, interest will be charged but the repayment system is designed to make these payments affordable for everyone. One major helping point is that you don’t have to make any repayments until the April after you graduate – so if you graduate in July 2013 your first payment won’t be due before April 2014 (a nice bit of breathing room to sort yourself out!).

The amount you pay back every month is calculated according to your earnings. Currently, you have to be earning £15,795 (£1316 a month) or more a year before your repayments will start. The amount is then worked out as 9% of your income that is over that limit. Sound confusing? Let’s run through an example – you graduate in July 2013 and you then start a job in the September earning £18,000 a year (lucky you!). Your first repayment will be in April 2014 and will be 9% of £184 (which is the amount over the limit mentioned above you are earning), and this works out as £16.

You don’t need to do anything about arranging these repayments either – SLC will contact your employers directly informing them of how much to deduct from your earnings and when. You won’t even notice the money going out because you never will have had it!

Paying your loan back quicker

Remember you can also make extra payments to pay off your loan faster. As your loan is being charged interest (1.5% if your course started in 2010 or after), you might want to consider doing this if you ever have a little extra left over one month. This can easily be done by ringing the loan company and arranging a one off payment.

If you are worried about anything to do with paying back your student loan then it is important you speak to someone about it. There are currently over 4 million students with a student loan so you won’t be the only one with that worry!