Introduction
Graduation season is fast approaching, and with that the end of an era comes to an end. We are finishing school, and entering into the big bad workforce. With that comes a multitude of responsibilities, including repaying back student loans.
When paying back your student loans, the one thing you don’t want to fall into is student debt traps. That is financial situations or decisions that can result in students accumulating more debt than is needed. This usually stems from a lack of understanding the long-term consequences and financial burden/strain it can have on a person.
However, as daunting as it sounds, the process is easily avoidable. It’s all about being sensible, practical and smart with your money, and the overall amount you are borrowing. Remember, it is a loan not a free payment. This means you are going to have to pay that money back!
Defining key terms
But before we get into the advice, let’s go over some key terms.
Student loans are a form of government-backed financial aid, designed to help students pay for their education. It is offered to under-graduate students to help cover their tuition fees, living expenses. These loans must be repaid, alongside interest. Repayments start after graduation, when income goes over a certain threshold.
In the UK, students are offered SFE (student finance England) through Students Loan Company (SLC), a non-profit, government-owned organisation. Students are offered 2 types of loans. The first is a Tuition Fee loan, where students’ entire tuition fee is paid for, and is paid directly to the university. The second is a maintenance loan. This type of loan is paid directly to the student, to help them cover their living expenses, transportation, books and all other school related necessities. Additionally, SFE is offered to postgraduate students but only to their tuition fees.
So what does it mean to be in student debt? Well it just means that you owe money, because you have borrowed funds you haven’t finished. As previously mentioned, you aren’t expected to pay your loans back right away. So for all the soon to be graduates, there is no need to panic! SLC requires you to earn above the income threshold before you must start paying back. As of 2025, it is £27,295 per year.
