Student debt myths

Lesson 7 of 15 in our free Student Finance guide: a 5-minute money game with the key points below.

Shown for England. Some rules here are different in Scotland, Wales and Northern Ireland: the lesson shows your nation's version.

This lesson is in the full version.

Free with a code from your uni, college, council, landlord or employer (worth £600/year). Lesson 1 of Student Finance is free for everyone.

Questions you'll answer

"Student loan is a graduate tax with extra steps." Which part is closest to true?

Myth: “Student loans show on your credit file.” — They don't. Lenders may still factor your repayments into affordability.
Fact: “If you lose your job, your repayments stop.” — No income over the threshold = no repayments.
Fact: “Any balance left after the write-off period is cancelled.” — Your plan (Plan 5): 40 years. England's Plan 5 is 40 years, Plans 2 and 4 are 30 years, and NI's Plan 1 is 25 years. Then it's gone.
Myth: “Debt collectors come after you if you earn under the threshold.” — Under the threshold you simply don't repay. (Keep your details up to date though.)
"Repayments come out of your pay automatically through PAYE" → Real. Yes — your employer deducts it like tax.
"You repay a % of your total loan each month" → Cap. Cap. It's a % of your income ABOVE the threshold.
"Self-employed? You repay through Self Assessment" → Real. Correct. It's calculated with your tax return.
"Your parents have to pay it if you don't" → Cap. Cap. The loan is in your name only.