Understanding Student Loan Repayments
Student loans can be your real hero in getting the life you dream. On the flip side, making the repayments can be a real pain for you. A huge chunk of your paycheck will be going to your student loan settlement.
If you get a federal student loan, repayments will start after you finish school, while repayments for student loans from private lenders can start right away.
Think of the loan as your investment for your future career. As you plan for your life’s success, it is likewise important to plan for your student loan repayments. This will give you a good head start for your finances.
Here’s a basic guide for your student loan repayments:
How student loan repayments are calculated
As soon as paychecks start coming in, repayments will commence as well. Each time you receive your salary, may it be per week, in two weeks or monthly, where your income before tax is more than the weekly or monthly threshold, repayment will be deducted.
You will be paying 9% of your income over the threshold. If your income changes, whether it increases of decreases, your repayment amounts will also automatically change to reflect this.
If your income is below the annual threshold, you can still make repayments, but only when your salary goes above the weekly or monthly threshold during any given pay period. This can happen when you do extra shifts, for example, or receive a bonus.
You can apply for a refund of your student loan repayments if you wish. You will be eligible for a refund if your income is equal to or below £18,330 in any one tax year.
Making a Repayment
In addition to the scheduled repayments you already make your salary, any other repayments you make are all up to you. However, voluntary repayments are not subject to refund.
You may want to make additional student loan repayments if you have unearned income of more than £2,000 a year, may it be from savings or shares.
You can choose to make one-off repayments any time using a debit or credit card, cheque or postal order. If you are abroad, you may pay via an international bank transfer.
Repayment through Debit or Credit Card
If you will make a card payment, there will be no extra charge. Just go to the website and log in to your online account. Bankcards accepted include Visa Credit, Visa Debit, Visa Electron, Maestro, Mastercard Credit, Mastercard Debit and Laser (Euro).
It is also possible for you to make a repayment without logging in to your online account. Choose the option, Make a card repayment, and use your surname and customer reference number.
Repayment through Cheque or Postal Order
Cheques and postal orders should be addressed to Student Loans Company Limited. Write your Customer Reference Number or Student Support Number on the back of your cheque or postal order and send it to the company address.
Repayment through International Bank Transfer (IBAN)
Bank transfers from abroad are accepted as your student loan repayments. Just don’t forget to include your Customer Reference Number as a reference to make sure the money you send will be applied to your account.
Contact your bank to arrange this type of repayment. Note that they may charge you for the service. Check the website for more details on this type of repayment.
Regular Monthly Repayments
If you wish to set up a regular monthly repayment to your student loan, you can do so with a Direct Debit. You can also use a debit or credit card online. Just go to the website and log in to your account.
Another option for you is to set up a standing order with your bank. You can download a form, complete it, and give it to your bank.
You must include your Customer Reference Number as a reference number so your repayment will be applied to your account accordingly. If the payment is towards a grant overpayment, include your GR Number. If the payment is towards a specific loan, include your Loan Account Number.
Direct Repayments to your Balance
Making a repayment directly to the company, the way the money is applied to your balance depends on the status of your account. Find out more about the way direct repayments are allocated to your balance.
Paying Off Your Loan in Full
If you intend to pay off your student loan straight away in full, you must call the company first to get an up-to-date settlement figure.
If you’ve been repaying your salary, you need to provide your last P60, and all of your pay slips for the current financial year. This information is needed for the company to calculate your accurate settlement figure.
Federal student loans such as the Student Loan Company in the UK are very flexible and borrower-friendly. While those offered by private lenders are handy, student loans offered by SLC are advantageous. You have a variety of options or plans to make the repayments.
Repayment Plan 1 involves repaying from overseas. There are certain specifications and guidelines to follow, so make sure you understand them. The same goes for Plan 2, there are specifications. You must read and understand each plan for you to know which one fits your circumstance. There are also mortgage-style loans and loans for post-graduate.
It is also possible that you will have a combination of two or more plans and loan repayments. For more information about the plans, visit the website: http://www.studentloanrepayment.co.uk
When considering funds for education, choose a federal student loan first before getting a private student loan. Student loan repayments may be quite a burden, but they are totally worth it. Just remember to keep track on your repayments.
Repaying them on time can also help you build your credit history nice and good. Those who do not have any loan of some sort will have difficulty in getting one in the future because they don’t have a credit record for the lender to check. It is the basis to determine one’s creditworthiness.