How to understand student loan repayment grace periods

Written by isobel phillips Google
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How to understand student loan repayment grace periods
You can apply for a student loan before your university or college place is confirmed. (Getty Thinkstock)

From September 2012, a full-time higher education student in the UK can apply for a tuition fee loan to pay for his or her course and a maintenance loan or grant to help with living costs such as accommodation, books, food and utilities. Loans are repayable with interest based on the retail price index whereas grants are not repayable. Part-time students can apply for tuition fee loans only. The date from which you need to start repaying your loan depends on the start date of your course and your gross income.

Skill level:
Moderately Easy

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Instructions

  1. 1

    Calculate the starting date of your course. If your course started after 1 September 2012 and finish before 2016, repayments won't start until April 2016. If your course started after August 1998 and finished before 1 September 2012, your loan repayment starts from the April after you graduate or leave your course.

  2. 2

    Calculate your annual earnings before tax. For courses starting after 1 September 2012 and for earlier income contingent plan 2 loans, you only need to make repayments in years in which you earn more than £21,000 before tax. For courses that started before September 2012 for which you have an income contingent plan 1 loan, you need to make repayments in years in which you earn more than £16,365 before tax. The rate of repayment in both cases is 9 percent of the amount by which your income exceeds the threshold.

  3. 3

    Check the date at which your loan became eligible for repayment. Any outstanding balance remaining after 30 years is written-off.

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