For any graduate taking their first steps onto the career ladder, student loan repayments loom large. Chances are you’ll be earning over £15,000 in your first job, which means that every month you’ll be paying out 9% of anything you receive above this.
However, graduates worrying about rising living costs and squeezes on salaries may be happy to hear that the government are looking to change loan repayment schemes so that graduates pay less over a longer period of time.
In a study by the BBC, the highest student loan owed in the UK by any one person currently stands at £66,150. Ouch. For any graduate who’s done a longer period of study than the standard 3 years, this may not be a surprise. And this is only set to get worse as an increasing number of universities announce that yes, they will be charging the maximum £9,000 in tuition fees. Think yourselves lucky if you’ve already graduated! Saying that, graduate workers are looking at many, many, many years of losing a hefty chunk of their salary to the student loans company each payday.
New repayment proposals
With the economy only just starting to recover and yet more uncertainty forecast, the Government has decided to get rid of the £15,000 threshold and instead slowly increase it between 2012 and 2016 to £21,000. However, critics of the new repayment proposals have complained that, with interest thrown in, a student borrowing £39,000 to cover a three-year course will end up paying £83,000 in slower instalments. Although, it should be noted that the loan is written off after 30 years. Bonus!
If you’re worried – or indeed angered – by this news then take a moment to look at the positives. If you check out the totaljobs.com salary checker for graduate salaries and trainee salaries you’ll see that many fall below the £21,000 threshold so you’ll have a bit of a break before you have to start budgeting in repayments. Also, even after you start earning more than the allowance, your repayments will start off fairly small. With inflation up, cost of living soaring and companies tightening their belts on salaries, it can be tough making ends meet and this could help you. Also, if you do end up making a lot of money, or coming into money (come on lottery numbers!), then you can always pay your loan off early.
Don't let it get you down
The main thing is to stay positive in your job search and try to concentrate on getting the best job for you. There are plenty of jobs out there and many companies are investing in graduates, with some big businesses even offering incentive schemes to attract graduate talent, such as paying off their student loans for them. You never know – you may not even have to think about student loan repayments if you’re lucky enough to get involved in such a scheme.
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