Many students take out a student loan in the UK without too much thought to how much they have to pay back at a later date.
For some, the prospect of paying it off seems a long way off and of course if you need the money from a student loan to get through university as most people do, then there is little option. Some think about options like going bankrupt when they leave university, but with some financial planning and a good job on the back of their course, there is no need to fear the student loan. There are other options that can be considered also, these include a payday loan.
It is well to be prepared though and know what sort of costs you are undertaking when you get your student loan, however.
Please note: with several notable changes having occurred since this article was written, the information below is now out of date pending update. For full information on student finance take a look at the DirectGov website: http://www.direct.gov.uk/en/EducationAndLearning/UniversityAndHigherEducation/StudentFinance/index.htm
The Student Loan needs to be repaid at a rate that is 9% of your gross earnings over the threshold that currently stands at £15,000 a year. This means that if you are earning less than this rate, then you do not need to pay off any contributions to the loan - in theory then you may never pay it back if you never earn above this level!
What does this mean? It means that when you hit that earnings level, as most graduates will aim to do as soon as they leave university, then you will need to start paying money back against your student loan.
However, the level it is set at of 9% is aimed not to have too much of an impact or handicap on you and therefore if you never actually get that 9% into your account in theory you are less likely to miss it than if you get the money and then have to manually pay back 9% of it from time to time.