Student loan interest is at 7.3%
- should I panic or pay it off?

Yes. There's always that risk. My explanations here are based on the current system.

Any major, negative, retrospective structural changes to the student loan system are unlikely. Student loans have been running in various guises since 1991 and are all in the same general shape they were when people signed up to them.

More likely than structural change is that some of the thresholds and amounts will differ to what's expected. We've already seen this when the Government froze the repayment threshold at £21,000.

In a letter to the Prime Minister at the time, I explained the biggest issue with that small change wasn't the cost, but that it'd knock future faith in the student loan system, leaving many asking "How can we trust it in future?" And indeed that's happened.

Thankfully, in October 2017, after much lobbying, the Government U-turned and announced it'd increase the repayment threshold to £25,000 – not a small concession. However, the Government froze it again at £27,295 from April 2022 until April 2025.

The repayment threshold will begin to increase annually by RPI from April 2025 (it has previously been increasing in line with the average earnings growth).

Yet the fact it has played around with the thresholds is concrete proof things can change. 

As I've already explained, for most, student loan repayments work like an additional income tax, and indeed this is another symptom of that. Yet for most, unless those changes were extremely radical, it still wouldn't greatly change the fact of whether it is worth overpaying.

So my view is, if under the current system it's likely overpaying the loan would waste money, the chance of that being true is greater than the risk of the system changing so that you should've cleared it.

Having said that, I don't have a crystal ball so nothing is guaranteed. It could even move the other way – after all a new Government could scrap all student loans, retrospectively, and that would mean if you had overpaid it would have been pointless.

This is a loan from the state, so the result is the state doesn't get repaid. Though remember the 83% figure is the number of people who won't FULLY REPAY – far, far less won't repay anything at all. Already graduates who started since 2012 have paid back £200 million and they've only been out of uni a couple of years at most.

Initially in 2012, the system was set up with the anticipation that under 50% wouldn't fully repay. They got that wrong, and now it's predicted to be far higher. It was 77% just before the announcement of the repayment threshold increasing to £25,000, and is now 83%. That means this has been nowhere near as successful for the public purse as it was supposed to be.

Yet it still does mean compared to before tuition fees, when the Government simply paid universities by a direct grant, billions are now paid back. Whether that's enough to justify the tuition fees, or if it's caused inflationary issues on universities' costs, is for the politicians to debate.

PS: I've one more thought on this, though it may make your brain hurt. The problem with saying the "taxpayer foots the bill" for what's unpaid, or "the state makes a loss if student loans aren't repaid", is that the whole concept of what SHOULD be repaid is arbitrary.

For example, one way to increase the number of people fully repaying would be to cut the interest rate to the rate of inflation (as it used to be before 2012). Do that and more people would repay in full within 30 years, thus the 'loss' would be reduced. Yet that would mean the total amount the state received would be less, so the taxpayer would actually foot a bigger bill.

Conversely and perversely, if interest rates were increased, and for ease let's be ridiculous and say to RPI + 100%, then almost no graduates would fully clear the loan within 30 years, so the 'loss' would be huge, but the state would take in far more, leaving the taxpayer far better off.

Yes, that's very similar. The key question is if you have the cash to pay upfront, would it actually save you money – and that mostly depends on how much you'd be likely to repay (ie, future earnings), not to borrow.

Taking an extreme example, if you never earn enough to repay anything, paying upfront would be a total waste of time. And even if not, building a mortgage deposit is likely to be a bigger financial priority than not taking a student loan and I'd save for that first.

I go into more detail on this in the Should I pay tuition fees upfront? guide, though it's now a few years since I wrote that.

The answer is yes. The student loan has deliberately been set up as a contract, not a tax, so that if you're no longer living in the UK you still need to repay it.

The rules state you're still obliged to repay 9% of all earnings above the local equivalent of £27,295/year. Not doing so could lead to substantial penalties. And this local equivalent isn't just a currency translation, it factors in the cost of living in your country, so it can be radically different.

If we ignore the moral obligation to repay the state for the education it provided you, the real question here isn't "Do I have to?" but "How can they make me?"

This is an issue of enforcement. Certainly if you temporarily leave the UK and come back having missed some payments, expect to be pursued. If you move abroad permanently, never to return, there may be no attempt to pursue you in a foreign court. But there are no guarantees of that.

What's more, the Government has said it will chase people who move abroad more thoroughly than it has in the past – through 'sanctions' and prosecution.

Further information on this is available on the Student Loans Company website, though it's a bit patchy in parts.

Yes, there are three types of financial help available for some teachers.

We explain each below, but bear in mind that you can't receive both the early-career payment and the levelling up payment in the same tax year, so you'll need to choose. However, you can apply for one of these two schemes while also claiming back part of your student loan, if you’re eligible.

The only catch is that for each of these schemes, HMRC treats the payments as income, so will deduct a student loan repayment from the amount you get.

1. Claim back part of your student loan each tax year. If you completed your initial teacher training (ITT) course between 1 September 2013 and 31 August 2021 and are still employed as a teacher at a state-funded secondary school in England, you may be able to claim back some of your student loan repayments.
   
   You need to have spent at least 50% of your contracted hours teaching biology, chemistry, physics, computing or languages in a school within an eligible local authority between 6 April 2021 and 5 April 2022 to apply.
   
   If your application's approved, HMRC will reimburse all the student loan repayments you made between 6 April 2021 and 5 April 2022.
   
   For more info and to apply, see this page on the Government website.
   
   
2. Early-career payments of up to £7,500. Between September and January each year, eligible chemistry, languages, mathematics and physics teachers can apply for early-career payments between of £2,000 and £7,500.
   
   How much you can get depends on what subject you teach, where your school is, and when you qualified as a teacher. You’ll be eligible if you started a postgrad ITT course or completed an undergrad ITT course in:
   
   – mathematics between 1 September 2018 and 31 August 2021
   – physics, chemistry or languages between 1 September 2020 and 31 August 2021
   
   You also need to be employed as a teacher in a state-funded secondary school in England when you apply for the payment. Some local authorities also offer an uplift payment to boost what you get.
   
   For more details and to apply, see this Government webpage.
   
   
3. Levelling up premium payments of up to £3,000. If your ITT course started (or your relevant undergrad course finished) between 1 September 2017 and 31 August 2022, and you spend at least 50% of your contracted hours teaching mathematics, physics, chemistry or computing in one of the state-funded secondary schools listed on the Gov.uk website, you could claim up to £3,000 a year in your first five years of teaching.
   
   Check if you're eligible and apply here on Gov.uk.