Further Education College

How will my child pay back a student loan?

Paying back student loans

This system relates to England as Wales and Scotland have a different system for student finance arrangements.

The main thing to remember about student loans is that it is your child's loan and not yours. They will repay their loans based on what they earn each year and not on the amount they borrow, which makes it unlike any other loan they might get from the bank, such as a mortgage.

When do they start paying back?

Students do not start paying back the government loans for higher education through the income tax system until they finish or leave their degree course. From the April after a student graduates they become liable to repay these loans for a period of up to 40 years, or until the debt is fully repaid - whichever comes first.

How much do they have to earn before you start paying the government?

For students who started their course after 1st August 2023 they will only make repayments when their gross income has reached £25,000. 

If they are earning less, they do not make any repayments. 

When they are earning above the threshold the money is deducted directly from their salary each month at source. So for example, the higher the graduate's income, the higher their monthly repayment and the more money they will repay overall.

The repayments will be 9% of everything they earn that is above that threshold. The interest rate is capped at the retail price index (RPI) rate of inflation. Student loan interest starts on day one. Read more about Interest Rates on student loans here.

After 40 years, any remaining debt that has not been repaid is completely written off. In effect therefore, this is more like a graduate income tax than a typical loan, with a 40 year cut off. 

More information

• Careerpilot has information on money for higher education

• The gov site has lots of useful information about the amount they will need to repay and the interest rates.
  

• Student Finance England has information on paying back loans

• Martin Lewis Money Saving Expert has video resources for parents and young people about student loans and repayments.

• The Student Room has specific information aimed at parents about all aspects of student finance.