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How does your career choice impact your ability to repay your student loan?

Posted by: Daniel Robinson
09/11/2017

 

In the past decade alone the price of higher education has soared.

Recent figures show us how much students will pay back and which careers will ensure that you pay back the loan in its entirety. Based on the debt you have when leaving, your career starting salary and how your salary increases as your career progresses. Your student loan is automatically wiped after 30 years.

Meaning the higher salary, the more student loan is repaid and the more of the loan’s interest also repaid. For example, take the following two different professions; a civil engineer and retail manager. Both will have similar starting salaries but the Civil engineer’s salary will increase significantly as they get more experience and therefore they will pay off larger chunks of their debt each month and the accumulated interest.

The retail manager on the other hand is not likely to have a significant salary increase throughout the 30 year time frame. So their repayments will always remain fairly low; with the likelihood that the whole loan won’t be paid within 30 years meaning that theirs will eventually clear too but due to the time frame elapsing.

The average debt for graduates is now just under £50,000 according to data from think tank the Institute for Fiscal Studies. Interest rates paid are determined both on earnings and the rate of inflation, meaning that the lowest and highest earners will pay less interest than those in the middle.

For graduates that begin their career on a starting salary of £18,000-19,000 they will not begin loan repayments until they earn more than £21,000 yearly threshold. Typically, careers in publishing start around this bracket and those in this industry will be likely to have their debt written off at 30 years having only paid 43% of their balance.

The example used earlier of the civil engineer will have a higher starting salary of £25,000 meaning they will pay off 100% of their student debt after 29 years and four months. An investment banker will have paid off their full loan in 14 years and five months; Accountants on average will repay theirs within 18 years.

(All figures provided by The Telegraph)

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