High Student Debt

Time flies. It is the start of another school year and before you know it your children are sitting A levels, making university applications and applying for student loans.

It is a fact that the interest rate charged on student debt is not high compared to a typical commercial arrangement. However, student debt is there to be repaid and a graduate earning over £22,000 will have deductions of 41% from their pay!.

For those earning over £22,000 this is 20% income tax, plus 12% National Insurance and 9% student loan repayments. This continues until the student loan is repaid or 30 years pass by.

£22,000 is not a king’s ransom. For those graduating and entering high-paid jobs, it will be hard to save enough for a house deposit. The rate of 41% tax will probably make it impossible for those who choose teaching, nursing or other less well paid professions without help from parents and grandparents.

Smart Mums and Dads with younger children, and grandparents should be thinking about this when they plan their finances.

It will be a struggle for the young ones without help.