How will student loan repayment work?

Just so you know, the Student Loan Company generally relies on you to update them on your employment status. They are not very proactive when it comes to establishing your employment status. This means they may not know if you are due to be making payments to them or not. Also, just so you know, HM Revenue and Customs are in partnership with the Student Loan Company to facilitate the collection of loan repayments, so if you are paying tax, there is a record of your earnings.

If you're struggling to make your payments, we're here to help, so let's get straight to it.

Here are three easy-to-follow steps to pay your student loan debt, including a repayment option you may not have considered.

The first thing you'll need to do is figure out which payment plan you are on. If you don't know, before you go any further, head over to 'Student Loan Repayments - Everything you need to know' to determine which plan you are on, then come straight back!

Next, you need to understand whether or not you meet the threshold to repay your student loan. If The Student Loan Company is already taking payments from you, it means you’ve reached one of the thresholds, and you’ve likely informed your employer or HMRC that you have a student loan that you need to make repayments towards. You can read more about student loan repayments here, but let’s take a look at a recap of the repayment thresholds:

• PLAN 1 – You are only required to make loan repayments once your income is over £480 per week or £2,082 per month. If your circumstances change during the year, and your total annual income ends up being less than £24,990. You can ask for a refund of the payments you have made.
  
• PLAN 2 – You are only required to make loan repayments once your income is over £524 per week or £2,274 per month. If your circumstances change during the year, and your total annual income ends up being less than £27,295. You can ask for a refund of the payments you have made.
  
• PLAN 4 – You are only required to make loan repayments once your income is over £603 per week or £2,616 per month. If your circumstances change during the year, and your total annual income ends up being less than £31,395. You can ask for a refund of the payments you have made.
  
• PLAN 5 – You are only required to make loan repayments once your income is over £480 per week or £2,083 per month. If your circumstances change during the year, and your total annual income ends up being less than £25,000. You can ask for a refund of the payments you have made.
• POSTGRADUATE LOAN PLAN - If you have taken out a Master's Loan or a Doctoral Loan, you only have to make loan repayments when once your income is over £403 per week or £1750 per month. If your circumstances change during the year, and your total annual income ends up being less than £21,000. You can ask for a refund of the payments you have made.

The good news is, if you don’t meet any of the above repayment thresholds, you will not need to make any student loan repayments, which could be a big helping hand towards taking control of your debt.

If you are struggling financially and your student loan repayments are making it even harder, the next step is understanding your options.

If you’re already in debt, the last thing we want to do is encourage borrowing, but if things are really tough, there is another option to consider regarding your Student Loan Company repayments. You can clear your student loan debt by taking out an unsecured personal loan with a bank. You’re probably thinking, “How does that help? I’ll have another loan to pay off!”

With an unsecured personal loan, you may find that the monthly repayments and interest rates are lower. This isn’t a decision to take lightly, as it does involve further borrowing, but it is an option that could relieve some of the stress if you are in real need. If you find yourself struggling with your personal loan, again, don’t panic, as we have options that can ease the strain in our unsecured debt section.

The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.