How to deal with student debts after you graduate
After graduation, you might be facing a lot of student debt. There are practical steps you can take to sort out your student debt repayments. Find out what debts you need to prioritise and where to get free help.
- Moving on from student life
- Tips on managing your student debts
- Prioritise credit card and loan debts
- Repaying your student loan
- Student debts and workplace pensions
Moving on from student life
It can take time to adjust to post-student life. Your career can take longer to start than you planned or you may have to move back to the family home to save money.
For most graduates the situation does improve but you might have to make some compromises along the way. Setting and sticking to a budget to deal with big bills and student debts is a smart way to get through this time.
Tips on managing your student debts
Pay off final student bills
Make sure you prioritise paying off your final student bills before you leave university or college as unpaid bills could hurt your credit rating. Our money tips tools for graduates can help you make a plan.
Get free debt advice
If making sensible cutbacks to meet your repayments isn’t helping, getting free debt advice should be your next step. There are lots of free, confidential services that can help. Check where you can access free debt advice.
Prioritise credit card and loan debts
Allocate some of your income to start reducing high-interest debts from student credit cards and bank loans. Make at least the minimum repayment and ensure you don’t miss any other instalments. If you do, it could hurt your credit rating and your ability to borrow in the future for a home or car.
Switch to a graduate account
Your next step is to switch to a graduate account to give you time to repay your student overdraft. Find out how long your bank will give you to repay your overdraft and when the authorised limit will be reduced. You don’t have to stay with the same bank, so shop around. This is a good time to set and stick to a budget to get back on track.
Repaying your student loan
You don’t have to start repaying your student loan until your income reaches a certain level. Interest will be charged on the outstanding debt but you only have to make repayments if you earn enough. If something happens, like losing your job, then your repayments will stop until your income reaches a certain level again. Remember, your income level might make you liable for student loan repayments at the same time as you are trying to pay down student credit card or bank loan debts.
Find out more about student loan repayments.
Student debts and workplace pensions
If you earn more than £10,000 a year, and your employer is required to, you will be automatically enrolled into a workplace pension scheme. Student debt might tempt you to stop payments into a workplace pension. However, saving for retirement is vital for your future wellbeing, so only consider opting out of a workplace pension if your student debt situation is out of control.
Our advice on Automatic enrolment if you have debts can help you decide.