Lesson 10
Student Loans: Income, Interest and Write-off
See why a student loan behaves like a tax on earnings, when its balance matters, and who actually saves money by paying extra.
A loan that behaves like a tax
Say your student loan statement shows the balance went up £2,000 last year, even though £600 came out of your pay. That feels like falling behind. But a UK income-contingent student loan isn’t repaid like a card, and that changes how you should read the statement.
It behaves more like a tax on earnings above a line, though it’s still a loan, with a balance, interest and obligations to the Student Loans Company. This lesson concentrates on Plans 2 and 5. Check which plan you’re on, especially if you studied outside England, have a postgraduate loan or live abroad.