Video Transcript – Student Loans

If you have taken out a student loan or a graduate loan this is more like a special tax in your future income. After you graduate, you will start repaying only when you cross an income threshold. The precise threshold depends on the “plan” you are on. You will never have to pay back more than 9% of your gross income above the threshold. You can find more information here: https://www.gov.uk/repaying-your-student-loan. 

So, it is evident that if you are eligible for a student loan it makes sense to use it as the terms are better than any loan you can get from the private sector. In the long-term the government makes a loss through the Student Loan Company, so this is a subsidy paid to students. This benefits those who study and do not manage to make high enough income in the future.