Considering Student Loan Repayment in the UK? Here Are 4 Things to Know

1) In the UK, education loan payments begin following the moratorium period (EMI holiday) or as soon as the borrower secures employment (whichever is earlier). However, interest is still accrued during the study and moratorium periods. Simple Interest is the type of interest charged during the research period, whereas compound interest is the type of interest charged after this time.

Typically, there are three ways to repay loans:

· SIMPLE INTEREST: In this instance, the borrower keeps paying the Simple Interest while he is a student. Therefore, simple interest does not keep increasing the principal, and the EMI simply includes the principal amount plus compound interest.

· PARTIAL SIMPLE INTEREST: In this arrangement, the borrower only pays a portion of the simple interest, with the remaining interest continuing to be added to the principal. Thus, the principal amount as well as the remaining simple interest are ultimately subject to compound interest.

· EMI: In this instance, the borrower waits to make any payments until the moratorium term is up. Due to this, the interest is paid in EMIs and is compounded on the principal plus the simple interest.

2) Repayment begins six months after finding a job or one year after finishing a course, whichever comes first. However, you might choose to pay the simple interest during the Principal moratorium period, which offers some interest reductions, in order to lower the EMIs.

Repayment begins regardless of whether you are working if you do not find employment within a year of finishing the course. The typical repayment schedule choices are:

· Full Deferral repayment – As long as they remain enrolled full-time, students may postpone payment until six months after graduation. A maximum of four years, which is the normal length of a degree, can pass before the payment is made.

· Immediate Repayment – Immediately following the loan's disbursement, interest and principal payments must be made.

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