Graduate Loans

Once you have graduated from university or college then the government leaves you alone and all you have are student debts consisting of your student loan, grants and probably credit card debt so it's time to apply for graduate loans to help you survive in your first years.

After Student Loans

Your student loan only needs to start to be repaid once you are in full employment earning over a certain amount (currently £15,000 per year) and this will be deducted from your salary by your employer but of course you need to live and the expenses for accommodation, eating and travel are a large cost no matter where you are working and if you are in London it's a tough decision to make on how you are going to finance your day to day life.

The early months and years *are* going to be tough and your debts may not decrease at all and with recent research indicating that an average student will be £23,000 from figures published by the push student debt survey which includes the standard student loan for university fees, maintenance and living expenses and most students will have credit card debt also. The Labour government have also suggested that the top up fees will be increasing in the forthcoming years so it's only going to get worse.

So now you know you have this debt what happens? If you can't get a job because of the recession then you won't need to repay your student loan at all although interest will continued to be added at the current rates until the loan is repaid. Additionally if you have any other bank loans or credit cards the interest will still be added to these.

Repaying Debt

If you are able to manage the loans and other debts you have then you should look to repay the debt that has the largest interest rate and that is almost certainly going to be any credit card you have. Don't even think about opening savings accounts or ISAs as this interest rate paid to you is going to be low single figures whereas credit cards are going to be at least 16% interest rate - may be higher.

You may be able to take advantage of 0% balance transfer to repay a credit card but whatever you do don't purchase anything on a balance transfer card because those purchases get repaid last and are always charged at the higher interest rate.

Graduate Student Loans

To get a graduate student loan there are a few places to go to although it may be tough if you don't yet have a job, regular income from other sources or a guarantor such as parents or guardians but try the following:

  • Bank loans - most people go to their banks for unsecured personal loans which could work out if you have a paid job - many banks are flexible towards students and it's best if you discuss your requirements with them and find out what you need to do to get a loan from them.
  • Supermarkets - many supermarkets now offer personal loans but these are all underwritten by various UK banks so if you get rejected by high street banks you may also get the same answer here
  • Others - other than bank loans there's not a lot else except for credit card balance transfers and they are likely to disappear soon. Why not try friends and family for loans and just to help you with accommodation and buying stuff you actually need like work clothes. It's best to avoid so called loan sharks or the small loan/ pay day loan companies as their effective interest rates can be 100% or more - sometimes into the 1000% range.

Notes about Personal Loans

Every time you apply for a loan your credit report will have an entry from the provider searching your credit history so the more times you apply and get rejected the more entries will be on your credit report.

Lenders will avoid people who have many entries because it's obvious they are being turned down for loans so be selective on who you approach and how many times you apply for loans.

In the current climate unsecured personal loans have an interest rate of around 8% per year or APR which is about half of credit cards but of course double your student loan. This is about as low as you'll get these days for graduate loans.