The cost of going to college, student loans and interest — are they worth it?

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Deciding whether or not to go to college is a big decision, not to mention deciding where to go and what to study.

A major factor that will influence the decision of young people is the cost of university studies.

The thought of taking on thousands of pounds of debt in the form of student loans is daunting, especially in this cost of living crisis.

But how much does college cost — and how much can graduates expect to pay back each month?

What financial aid can students benefit from?

Students can apply for student loans to cover their tuition fees and living expenses.

Tuition fees cover the cost of the course and are paid directly to the university.

Meanwhile, maintenance loans are paid directly to students to help cover their living expenses. The amount of the loan depends on the household income, the place of study and the place of residence.

How much are university fees in the UK?

Tuition fees vary depending on the region students are from and where they are attending college.

Students from England, Wales, Scotland and Northern Ireland studying in England will pay up to £9,250 a year.

Students from England, Wales, Scotland and Northern Ireland studying in Wales will pay up to £9,000 a year.

Students from England, Wales and Northern Ireland studying in Scotland will pay up to £9,250 a year – but Scottish students pay nothing.

Students from England, Wales and Scotland studying in Northern Ireland will pay up to £9,250 a year – but Northern Irish students will pay up to £4,395.

How much do undergraduates pay back?

Students will be enrolled in Repayment Plan 2 if they started their course on or after September 1, 2012.

Graduates will only start repaying their loans once they have reached the income threshold for repayment, which is currently £27,295 per year, £2,274 per month or £524 per week in the UK.

Graduates will pay 9% of their earnings above the repayment threshold, which means the monthly repayment increases with wages.

For example, someone earning £29,500 will pay around £16 per month, while someone earning £33,000 will pay £42 per month.

However, students who start their courses in September 2023 will have to start paying back their loans once they have earned £25,000 a year.

How much do master’s students reimburse?

Masters graduates will start making repayments once they reach the threshold, which is £21,000 per year, £1,750 per month or £403 per week in the UK.

They will pay 6% of their income over the repayment threshold, which means that the monthly repayment installment increases with wages.

For example, someone earning £22,000 before tax will pay around £5 per month, while someone earning £30,000 will pay around £45 per month.

How much interest do students pay on loans?

The government recently announced it would cut student loan interest rates in England and Wales to help tackle the cost of living crisis.

The Department for Education said it would cut student loan interest rates to 6.3%, after previously announcing they would be capped at 7.3%.

The change applies to undergraduate (plan 2) and postgraduate (plan 3) loans.

How are student loans repaid?

Employees who pay tax in the UK will have student loan repayments deducted from their monthly salary.

The student loan company will give HMRC their name and national insurance number, and HMRC will inform the employer that the employee has a student loan.

Graduates must also inform their employer that they have a student loan.

Self-employed people will pay their student loan through the self-assessment system.

When are student loans forgiven?

Student loan repayments plus interest will be forfeited 30 years after someone is due to start making repayments. This applies to people under Plan 2 and Plan 3.

This only applies if they have made all refunds due up to that date.

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