How to Deal with student debt after you graduate

How to Deal with student debt after you graduate by Tom Bunkham Getting down about your debt?Graduates coming out of university this summer could be leaving with more than £30,000 of debt, which can feel like a staggering amount.The good news is you won’t suddenly get a statement for the full amount landing on your doorstep. Paying back your student debt is a long process and simpler than you may think.Here the Money Advice Service gives its tips on managing your money after you graduate.Tie up loose ends at universityIf you’ve been renting accommodation in which you’ve been responsible for paying bills, make sure you get all your final bill statements and pay them off.It’s important to remember unpaid bills could hurt your credit rating. If you want to qualify for the most competitive loan and credit card rates then you need a good credit score.Also speak to your landlord about getting your deposit back â€" it’s a good idea to have a bit of a clean first! While you’re at it, don’t forget to also contact the local authority of the area you’re moving to in order to get on the electoral register. This is important for your credit rating too.Deal with any debtsStudent loans are there to support you through university, but if you find your debt is worrying you â€" maybe money you owe on a credit card or store card there are people you can speak to for advice. The Money Advice Service has a debt advice locator tool which helps you find local, free, confidential advice if you need it.Don’t stick with your student bank accountOnce you leave university or college your bank will usually turn your student account into a graduate account. Remember, you don’t have to stay with the same bank, so it’s worth shopping around.You may find that your overdraft reduces too, but don’t worry, this won’t happen all at once! What generally happens is that your overdraft allowance will reduce slightly every year. Use this as an opportunity to rebalance your budget after you graduate.Start repaying your student loanRepaying your student loan sounds scary, but most of the groundwork is done for you. Once you start earning over a certain amount, your student loans are repaid automatically through the tax system, and stop once you’ve paid them off.There are two types of repayment plan for student loans â€" Plan 1 and Plan 2. Plan 2 applies if you are studying in England and Wales and started your studies on or after 1 September 2012. Otherwise, Plan 1 repayments apply wherever you studied in the UK.For Plan 1 repayments, you will pay 9% of anything you earn over £17,335 before tax per year.For Plan 2 repayments, you will pay 9% of anything you earn over £21,000.You do have the right to pay off your student loan faster â€" or even in full, if you want to. However, before making any extra payments, you should work out whether paying off money elsewhere, such as credit card debt, or getting together some savings might be a better use of any spare cash.Maintaining your money habi tsWhen you’re going through changes in your life, such as starting off at work, it’s a good idea to maintain some good money habits that can help you through your life.Keeping some money aside to reach some savings goals, such as a house or a holiday, is a good idea. Aren’t we all guilty of overspending on something, when the money could be better off saved or spent elsewhere? Cut down on the things you don’t need, such as the daily coffee before work or Friday night takeaways, and you could be reaching your bigger goals more quickly than you think.Also, considering your pension payments earlier on could make a considerable difference to the amount of money you have to retire on. The Money Advice Service has a useful guide on your options when it comes to your first pension.