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The Student Finance Myths That Won't Die

Every year, students take out loans to fund their studies. Some are put off by the cost of study and the prospect of decades of debt. Yet some of these decisions are taken in bad faith. There are many myths about student finance. Here, we unpick some of the most common.


Only the Rich Can Afford to Go

Universities have (rightly) been criticised for not doing enough for students from state schools. However, part of the problem is the belief among those from lower income families that university is unaffordable. It’s believed only wealthier students can afford it. Not true! You pay for your studies through student loans. Unlike regular loans, you pay nothing back until you earn over a (generous) threshold. Even when you do pass that threshold, the repayments are low enough to barely notice.


Student Debt is With You for Life

Unlike most other loans, there is no requirement to keep paying until the balance is cleared. If you went to university before 2012, it is wiped after 25 years. If your course started after 2012, you have 30 years. Unless you went to university in your 40s or later, you will not be staring retirement in the face and still making payments.


The Government Keeps Increasing the Interest Rate

This too fuels fears of the debt that will never leave you. It’s wrong to say that the “government” keeps increasing it. The interest you pay on your student loan is RPI-linked inflation. If the RPI goes up, so does your interest rate. This is purely academic anyway as there is no guarantee you will ever clear the balance and if you never earn over the threshold, there is no need to worry about the interest rate.


I Can’t Afford a Master’s Degree

Student loans were once only available for bachelor’s degrees and their equivalents. There are so few bursaries and grants available to postgrads and most are reserved for the most promising students. If you didn’t get a 1st, your finance chances were limited. Now, there are loans worth over £10k repayable on the same terms. This was introduced to stop the haemorrhaging of students to the continent who could study at a much lower cost, in some cases free.


I’m Concerned About my Credit Score

If you don’t clear the payment, it will not affect your credit score. If you drop below the payment threshold (you lose a job or get lower paid work) your credit score will not drop. The student loan system is designed in such a way that it will not affect your credit score. Like income tax and NICs, it comes straight out of your wages, so you never receive it into your bank in the first place.