Student loan repayments depend solely on how much you earn.
Thank you for reading this post, don't forget to subscribe!When it comes to student loans, few people in the UK understand the system better than Martin Lewis, founder of MoneySavingExpert. Recently, Lewis addressed one of the biggest misconceptions about student loans – and it could change the way many students and graduates think about their debt.
The Common Misunderstanding
Most people believe that student loans work just like traditional bank loans or credit cards. They assume the full amount borrowed must be repaid, with interest, regardless of income.
But Lewis stresses that this is not how UK student loans work. Instead, repayments are more like a graduate tax:
- You only repay a percentage of income above a threshold.
- After a set number of years (usually 30–40, depending on the plan), any unpaid balance is written off.
- The size of the loan doesn’t matter as much as income after graduation.
Why This Matters
This misunderstanding often creates unnecessary anxiety for students and parents. Many fear the rising tuition fees will leave them in lifelong debt. However, Lewis highlights that:
- If you earn below the repayment threshold, you pay nothing.
- High earners may pay more, but only as a share of income.
- For many graduates, a large portion of the loan will never be repaid before it’s written off.
In short, student loan debt should not be compared to mortgage or credit card debt.
Martin Lewis’s Key Advice
- Don’t panic about the total debt – focus on what you repay monthly.
- Understand your repayment plan – terms vary depending on when and where you studied.
- Don’t rush to overpay – for most graduates, overpaying makes little financial sense.
- See it as a tax, not a debt – repayments are based on earnings, not loan size.
Final Thoughts
Martin Lewis’s guidance is clear: the real burden of student loans is not the debt figure, but how it affects monthly income. By treating it like a tax rather than a traditional loan, students and families can make better financial decisions without unnecessary fear.
For those heading to university or already repaying loans, understanding this difference is crucial.
