Student Loans

Should Mature Students use Student Loans?

Student loans are available for anyone studying for a first or further degree as long as they have not had a grant or student loan in the past. This means that they are available to students of all ages including mature students. However, mature students might be more reluctant to sign up for a student loan, even though they are entitled to them, because of the fear of debt.

Fear of Debt

Many younger students have not been exposed to debt and so will not be afraid of it but more mature students may have had loans in different forms. If they have struggled with paying them back or found them stressful to arrange then it may make them feel that they do not want other loans. They may be worried that they will get into so much debt that they will not be able to repay it or that it might get in the way of things that they want to do in the future.

An important thing to remember is that a student loan is not like other types of debt. In many countries that run similar schemes, they are not even called loans because they are nothing like them. The name can make people fearful and the way politicians speak about them can again make people worry about them and it is really important to understand how they work so that you do not feel unjustifiably afraid of them.

Repayments

A student loan does not have repayments that work in the way that a normal loan works. The repayments only have to be made once you have left university and are earning enough money. There is an earning threshold where you will not have to pay anything back and after you cross the threshold you will pay back a minimal amount. If you salary increases the amount you have to pay will go up but if your salary decreases it will go down. This is because the repayments are made through a tax code which is set up specifically to take the money once you earn enough and just a small percentage.

This means that repayments will always be met as they are taken before you are paid (unless you are self-employed), so you will not have to worry about this. As they are only taken if you earn above a certain threshold, then you will be able to afford to pay them. You will not even notice that the money is missing as it will come out as your income goes up. If you are self-employed you will need to put the money aside to pay at the end of the tax year. Like you will your income tax, national insurance and any business tax or VAT.

Considerations

A mature student may worry that they perhaps have a family or a mortgage and so having to repay a student loan will impact on that. However, as the repayments are small and means tested and are not included in your credit record, they should actually make very little difference in this way. They’re not the same as an Emu payday loan for example. Having a degree should be able to give you the opportunity to get a better paid job and so you should have for money to be able to afford these things anyway even if a small amount is taken away for repayments.

It is worth being aware of the consequences of not completing your course though. You will still have to repay the money that you borrowed and you will not have the degree to allow yourself to get a better paid job. This will mean that you will be more likely to be earning below the threshold of having to repay anyway. The same rules apply and so if earnings go up then the repayments will start having to be paid.

After thirty years a student loan is paid off. This means that you will then be free of any remaining debt and about 70% of graduates do not repay their full loan as they have not earned enough over the thirty years to do so. This means that you do not have to repay the full amount and therefore there is nothing to gain form making overpayments or repaying it early unless you think you will be one of the few graduates that will be earning enough to repay it all.

So whether you are a mature student or not, should not be a factor in deciding whether you should take out a student loan or not. The conditions are the same for everyone and all repayments are means tested. All it means is that you will be older when your loan is written off or repaid but this should not be a significant factor. You may have children or a mortgage while you are a student, but if you are younger then you are likely to get these before the loan is repaid so again, this will not be a significant factor.

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