Shadowing a Doctor

January 27, 2014

Graduating with literally thousands of pounds of debt can be worrisome but often unavoidable. A very small percentage of students actually get into or graduate from medical school without a loan. The knack of avoiding getting too deep into debt lies in planning when and how you want to pay off your loan. Loans that you’ve had to take for paying your tuition fees and living expenses can become an onerous burden when you join the work force. So what is the best way to repay them? Is it best to pay off your student loan early if you have some spare cash on hand? As with most matters related to money and especially with loans, there are no simple answers. A lot depends on where you lived when the loan was granted, where and when you attended med school, your average salary, your expenses and any other debts you may have. There are various other factors that you will have to take into consideration as well.

Student Anna learning how to weigh a baby on the neonatal unit in Tanzania. Knowing the right time to repay is important

Student loans are very different from the personal loans that banks give you. The amount you repay and the time you start repaying it will vary depending in where and when you studied. It has very little to do with the actual loan amount. The basic rule is that you will begin repaying your loan only when you start earning a specific, pre-determined amount. 

Once your annual earnings touch £21,000, the current repayment threshold, which is 9% of your total income, will be taken each month to pay off your debt. This threshold is updated annually in line with your average earnings. 

The other factors that enter the equation are:

  • Any additional income that you earn will also be considered in the calculations
  • The loan repayments are taken out of the pay by the HM Revenue & Customs in addition to other deductions and  tax
  • If at any point of time your income falls below the stipulated threshold, the repayments will be stopped automatically
  • Repayments are also automatically stopped when you’ve finished paying off your debt
  • You are not required to repay bursaries, grants or awards that you have received to help pay for your education or even your living expenses
  • For those who are self-employed, the HMRC works out what you are required to repay once you have filed your tax return on an annual basis. You must ensure to check the box on the form that says you had taken a student loan.

Does early repayment help?

It is possible to make early repayments to the company from which you have taken the student loan, based on how much you are earning. However you should know that most student rates carry very low borrowing rates, so if you have any other debts it makes better financial sense to pay those off first instead.

While you are still in debt, it is important to simplify the way you live. Cut back on non-essentials, stop indulging in luxuries, look for the best bargains when you go shopping and make use of online comparison sites as ways to save money. Pack lunches to study or work instead of eating out. Sell-off all your clutter on different auction sites and spend smartly. These small measures will all add up in the end and will help you pay back your student loan sooner rather than later.