Student loans: more like a tax than a debt

A UK student loan doesn't work like a credit card or an overdraft. You only ever repay a percentage of what you earn ABOVE a threshold, straight from your pay, and whatever's left after a set number of years is written off, with nothing more to pay. That makes it behave far more like a tax than a debt.

You repay a share of income, not a fixed bill

Repayments are 9% of what you earn over your plan's threshold (6% for a Postgraduate Loan). Earn under the threshold and you pay nothing that month. The balance and its interest don't change what leaves your pay. Only your salary does.

It gets written off

Depending on your plan, anything still owing is cancelled 25, 30 or 40 years after you were first due to repay. For a lot of graduates the loan is written off before it's ever cleared, which is a normal outcome, not a shortfall.

Why paying extra can cost MORE

Here's the counter-intuitive bit: if your loan would be written off anyway, every extra pound you throw at it is money you didn't have to pay, so the total you pay over your life goes UP, not down. Extra payments only save money if they clear the loan BEFORE the write-off date, which depends entirely on your future income. And unlike savings, money paid in can't be taken back out.

So how do you know?

You can't know for certain, because nobody can predict your future pay. The repayment calculator lets you try different salary-growth guesses and watch how much the answer swings. That swing is the honest answer: for some careers clearing early saves money, for many it doesn't. This is information to explore, not advice on what to do.