As the pandemic and lockdown continues in the UK, you and your family may be experiencing financial difficulties or have concerns about the future.
If you are about to graduate, while you may still be able to take up employment offers, it is possible that some employment contracts will be postponed or cancelled. Looking for a new job may also be challenging for a while, so you need to know what your options are with respect to financial support and where you stand with bills and banking.
In this article we address some key questions which may be concerning you:
- What will happen to my student overdraft when I complete my studies?
- When will I start to pay back my student loans from the Student Loans Company (SLC)?
- Can I still receive money and housing advice from King’s if I experience financial issues after I graduate?
- Can I get support with my career plans?
- What else should I be doing to protect or understand my finances now that I am graduating?
What will happen to my student overdraft when I complete my studies?
If you currently have an interest free overdraft, please be aware that it will not remain interest free forever. We advise that you check your terms and conditions for when interest will be applied and make plans to repay this once you are working.
Most banks offer a transition period from the end of study to starting work, before you have to start paying back your overdraft to avoid paying interest. This will differ from account to account and bank to bank so check directly your bank, because they may also be able to advise if they have put extra concessions in place to help customers through coronavirus.
If you’re not sure how to start paying it back, Which have a great guide on how to manage this.
When will I start to pay back my student loans from the Student Loans Company (SLC)?
You would normally start to repay your student loan from the April after you complete your course. How much to you repay and how much interest you accrue, will depend on how much you are earning and which type of student loan you have (Plan 1, Plan 2 or Postgraduate Loan).
Most current students or those just graduating this year, will be on a Plan 2 loan.
If you started your course before September 2012 or your loan is from Northern Ireland or Scotland then you are on Plan 1.
Plan 2 loans will only be paid back once you earn over £25,725 a year, £2,144 a month or £495 a week. You pay back 9% of the amount over the threshold; for example, if your salary is £26,725 then you pay 9% of the £1000 that you are over the threshold so £90 per year.
The payment comes directly out of your payslip, like a tax, if you’re employed.
Self-employed graduates will need to tick the box on their tax return to indicate that they have a student loan and graduates working overseas will need to submit an ‘Overseas Income Assessment Form’.
You are gaining interest on your student loan while you are studying, at the rate of the UK Retail Price Index (RPI) plus 3%. Once you graduate, the interest will range from RPI to RPI plus 3% based on your income.
You can pay the SLC directly to make extra payments or pay off the loan in full at any time. This may save you money in the long run, by avoiding interest on the loan, but make sure this works with your budget as many essentials come before this when budgeting priorities.
Important to know: If you don’t pay off the whole loan within 30 years of starting repayments, the SLC normally writes-off the loan, meaning you no longer pay anything back.
This plan is different from Plan 2 loans in several ways. You have a Plan 1 loan if your course started before 1st September 2012 or anytime if your loan is from Northern Ireland or Scotland.
The repayments begin at a lower threshold, £18,935 a year, £1,533 a month or £354 a week. The repayments are still made as 9% of the amount over the threshold, e.g. a salary of £19,935 pays back 9% of the £1000 over the threshold, £90 per year. You pay the loan back using the same system as above, most people having it automatically taken out of their payslip.
Important to know: Another difference is that the interest rate on the loan is set every September and is currently 1.75%. There is variation in getting the loan written off, so check based on your circumstances with the SLC.
Full details and links for further information are available from UK.GOV.
Can I still receive money and housing advice from King’s if I experience financial issues after I graduate?
The Money & Housing Advice team at King’s College London are happy to provide advice and information for up to 4 months after you complete your studies, but we may not be able to act on your behalf. If you do need an advocate, we can signpost you to relevant services.
Please call the AdviceLine or complete the online booking form to contact the team.
Can I get support with my career plans?
King’s Careers & Employability will support you to get clear about your career plans and put these into action, including enabling you to navigate current changes in the employment market.
Find out more on the Careers website, where the services remain fully available online.
Important to know: You can continue to use the service for up to two years after you graduate.
What else should I be doing to protect or understand my finances now that I am graduating?
The Money Advice Service has published Money Tips for Graduates, which we highly recommend along with information from Save the Student, Blackbullion, The Money Charity and the Financial Times.