Find out if you’ll ever manage to pay off your student loan with the Daily Mail’s new calculator.
Using figures from the Student Loans Company, the Bank of England, the Office for Budget Responsibility and the Office for National Statistics, our tool lays bare the staggering amount of interest you’ll end up forking out over time.
That is, if you ever earn enough to wipe it off.
For example, a graduate with £53,000 worth of debt – the average amount – earning the typical starting salary of £32,000 may end up having £260,000 written off.
To use our calculator, input your details below. You will need to enter the year you started university and when you graduated, as well as your current salary and how much debt you’ve got left – a figure that can be found by logging into the Student Finance portal.
Our calculator is based on a slew of assumptions that cannot constitute financial advice and is merely illustrative.
Officials estimate the value of outstanding loans in England alone to be £267billion.
But this will surpass £500billion by the late 2040s, according to the House of Commons Library.
Government forecasts predict around 56 per cent of full-time undergraduates starting in 2024/25 will repay their loans in their entirety. That is more than double the 2022/23 cohort, the last before sweeping reforms kicked in.
The most recent graduates only begin repaying their loans once they earn more than £25,000, with 9 per cent of income above that threshold going to clearing the debt.
Students starting university this year will take on course fees of up to £9,535 per year but also loans to cover living costs which can add tens of thousands to bills.
Maintenance grants were scrapped in 2016.
A recent Department for Education report estimated that the average graduate earns £42,000. Those earning that amount would pay off around £1,200 a year.
Interest payments during that year would amount to around double that, making the prospect of paying it off in full before it is written off a pipe dream for many.
Campaigners have called for an end to the ‘graduate tax in all but name’, given that many see no hope in paying them off before they are written off.
Liz Emerson, chief executive of the Intergenerational Foundation think tank, told the Daily Mail that student loans are ‘pushing young people further away from the savings milestones that that the previous generation were able to achieve’.
She said: ‘Everybody over the age of 55 got higher education for free… but older generations have pulled the ladder up after themselves once again.’
Graduates from the wealthiest 10 per cent of backgrounds have ‘escaped’ the hefty payments as their parents paid tuition fees up front, Ms Emerson added.
Data from the Student Loans Company (SLC) showed that last year 1.8million graduates owed more than £53,000. The largest loan balance in the whole country had reached £252,000.
Repayment thresholds depend entirely on when someone graduated, meaning some will never earn a high enough salary to repay their debt.
Student loan interest starts accruing the day you receive your first payment – or the beginning of university, rather than after you graduate.
Sebrina McCullough, of financial wellness platform, Money Wellness, previously said: ‘Student loans are often the first type of borrowing people do. And they can be scary because it sounds like you’re taking on a huge amount of debt.
‘But student loans are different from every other type of borrowing and shouldn’t be viewed in the same light.
‘The reality is that most people will have their student loan written off before they’ve finished repaying it.
‘Student loans expire after either 25 or 30 years, or once you turn 65, depending on the plan you’re on.’
She added: ‘You also won’t be expected to pay back your student loan if you become permanently disabled, ill, or pass away. This is different from normal loans where the debt is passed onto your estate and must still be repaid.’
Student loans aren’t viewed in the same way as other debts, such as a credit card or personal loan, and are not included in your credit score.
All undergraduates, regardless of the plan they’re on, will pay 9 per cent of their income over the threshold towards clearing their debt, while those with postgraduate loans pay 6 per cent.
Loans taken out between 1990 and 1998 are not collected through the tax system and operate more like regular unsecured loans.
Methodology of the tool
The tool guesses your future loan balances and repayments by approximating what your salary payment thresholds are likely to be in the future, assuming they will rise with the Office for Budget Responsibility’s CPI inflation forecast.
It then takes your current salary and calculates the payments, under the assumption they will rise at the same rate of inflation.
Future interest rates are based on the OBR’s forecasts for RPI, which is how it is set.
Write off dates are based on the different existing plans. For example, students on Plan 2 terms have their remaining debts wiped off 30 years from the April after they graduate.
