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What happens to my student loan when I graduate? - Ask Our Expert

Our money expert says…

Hi David,

Graduation and starting out in the real world can be tough, without having to deal the trauma of securing a first job.

With a large student loan hanging over you, it can seem tougher still to focus.

Assuming you are going to straight into the world of work, you do not need to start repaying your student loan until you are earning £15,000 a year, which is the equivalent of £1,250 a month gross.

Repayments are made automatically through the tax system from your pay packet each month.

The repayments start on 6 April after you graduate. So you will graduate this June and not start making repayments until April 2011.

If you are taking a masters degree, you cannot get a student loan to help you through the Student Loans Company, but you will not have to start repaying your loan unless you are earning over £15,000.

If you need help to start reaching out into the world of work and need a hand in the form of a graduate loan, you’ll have to head to a bank.

You are not tied to taking a graduate loan from the bank you have a student account with, so shop around to get the best deal.

Graduate loans are available for usually two or three years after you graduate and you have to provide proof you have graduated and confirmation that you have a job.

I know a graduate with a job lined up with an accountancy firm who took a loan to pay for a trip around South America, but most graduates use them for far more mundane things such as buying work clothes or getting a deposit together for a new flat.

Unfortunately, you can’t usually get a graduate loan if you don’t have a job lined up, so turning to the bank to help you until a first job comes along probably isn’t an option.

Also, see our guide to student debt

Good luck with your exams!

Chris