A new student accommodation complex in Southampton, UK, has opened its doors, featuring towering buildings that overlook traditional terrace housing. As students get accustomed to their new dorms or apartments, financial literacy and budgeting have become important conversations. College students can take advantage of exclusive financial tools and banking options. These resources allow them to offset their costs and position themselves for success after they graduate.
As of August 2023, an entire generation of students have since embarked on their academic journeys with repayment plans for their student loans fundamentally changed. Financial experts emphasize the importance of understanding these systems to avoid unnecessary pitfalls.
Understanding Student Loan Repayment Plans
Almost all of the students who started school after August 2023 are now in plan five. In this scheme, repayments start only after a person’s salary reaches £25,000 per year. Students from Northern Ireland would be included in plan one. They are privileged by a repayment threshold of £26,065 per year and lower tuition fees as long-term residents.
If you began your course between 2012 – July 2023, you are probably on plan two. Under this plan, you’d have to begin repaying as soon as you earn over £28,470. Scottish students are included in plan four and do not have to begin repayment until they earn more than £32,745.
Nontraditional postgraduate students tend to benefit greatly from the extended grace period as well. That’s largely due to the fact that most of them complete their runs by the end of September. This grace period can give invaluable breathing room for graduates to find work and get back on their feet financially.
“It’s worth checking your online student loan account to keep track of your balance and any interest building up,” – Paul Slinger from NatWest.
Utilizing Financial Tools and Resources
Students can use more apps than ever to make their financial life easier. For example, apps such as Splitwise make it easier for students to share bills and dining costs with roommates or classmates. This can encourage clearer financial conversations between housemates and avoid future surprises.
Also, banks are making available some other goodies to make it easier for students to manage their money. Other lenders offer an interest-free overdraft for a certain period after graduation. In the UK, for example, NatWest gives new graduates an overdraft of up to £3,250 during their first year. This sum drops down to £2,250 in year two and even further to £1,250 in year three.
“It’s always a good idea to check how your overdraft terms might be affected, so you can make a plan to repay the debt before charges apply,” – Paul Slinger.
Students need to become accustomed to communicating their student status with their local council. This simple move can open doors to several affordability program discounts, which can further reduce the cost of living.
“Let your local council know your status, and check if you’re eligible for any discounts, such as if you live alone or with other students,” – Paul Slinger.
Planning for Graduation and Financial Independence
As students graduation looms, it’s time get them ready for that leap into the work world. All the high street banks provide graduate accounts with good terms, but financial experts warning that these accounts aren’t appropriate for everyone.
Tom Allingham from Save the Student says graduate accounts provide a great safety net of benefits. He believes they are not necessary for all people.
“Of course, not every graduate will need a 0% overdraft, and if you don’t, then a graduate bank account may not be the best place for your money,” – Tom Allingham.
For students who begin their studies after July 5, they have until October 5 of the tax year in question to register for self-assessment. Those who don’t manage to keep up with their financial obligations may find themselves in danger of running into trouble in the future.
Slinger cautions that repayments may be erroneously taken out sooner than scheduled.
“That said, repayments can be mistakenly taken, so keep an eye on your payslip – if you notice an early or under-threshold repayment, look into claiming a refund,” – Tom Allingham.