Are Student Loans Considered Consumer Debt?

1. Introduction

If you have ever taken out a loan to pay for your education, you may have wondered: Are student loans considered consumer debt?

This question has real implications for how your debt is treated under the law and how it affects your financial life. In this article, we will explore what consumer debt means and dive into whether student loans fall into that category.

We will look at the issue from both a US and UK perspective, blending legal insights with practical advice.

Whether you are a recent graduate in the U.S. juggling loan repayments, or a university leaver in the United Kingdom sorting out your student finance, this guide will help clear up the confusion.

Before we zoom in on student loans specifically, let us clarify what consumer debt actually is and why it matters.

1.1 What Is Consumer Debt? (With Further Examples)

Consumer debt refers to personal debt incurred for household, family, or personal use – essentially, money you borrow to purchase goods or services for yourself (not for business purposes).

Common examples include credit card balances, personal loans, car loans, mortgages, and yes, student loans​. In contrast, debts taken on by businesses or governments are not considered consumer debt.

Think of consumer debt as the kind of borrowing everyday people do in their personal lives, whether it’s swiping a credit card for a new laptop or taking out a loan for college or university tuition.

• Credit Card Debt: This is one of the most prevalent consumer debts. It’s a form of revolving debt, meaning you can borrow up to a limit and pay it down or add to it each month. If not paid off, credit cards often carry high interest rates.

• Auto Loans: Loans for purchasing a car. These are typically secured debt (the vehicle serves as collateral) and are paid in fixed instalments.

• Mortgages: A mortgage is a loan to buy a home, secured by the property itself. It’s usually a long-term debt with lower interest compared to credit cards. Mortgages are for personal housing, so they count as consumer debt (albeit a special kind).

• Personal Loans and Payday Loans: These are lump-sum loans often used for various personal expenses (home improvements, emergencies, etc.). Payday loans are short-term, high-interest loans meant to tide you over until your next paycheque.

• Student Loans: Money borrowed to finance education – tuition fees, living costs, books, etc. Student loans can be from government programmes or private lenders. They are generally considered a form of consumer debt, since attending college or university is a personal investment rather than a business venture​.

As you can see, student loans fit into the consumer debt category because they are personal obligations (you borrow as an individual for your own education). However, student loans have some unique characteristics that set them apart from, say, credit card debt.

These differences become apparent when you look at how student loans are handled in practice, especially across different countries.

So, while the short answer is yes – student loans are usually considered consumer debt – the full story is a bit more complex.

Next, we will unpack what that means for borrowers, starting with the United States and then the United Kingdom.

We will examine the legal treatment of student loans, how they show up on your credit report, what happens if you can’t pay, and how the government plays a role. By understanding these aspects, you’ll be better equipped to manage your student debt like a pro.

2. Are Student Loans Consumer Debt? (Short Answer: Yes, But It’s Complicated)

In general terms, student loans are viewed as consumer debt because they are personal loans taken out for education, which is a personal consumption purpose (as opposed to a business expense).

However, labelling student loans as “consumer debt” doesn’t mean they function exactly like a credit card or a car loan.

Student loans often have special rules and structures due to their purpose of funding education. The classification can be complicated by legal and regulatory nuances:

• Different Protections: Some consumer protection laws that apply to typical consumer debts (like credit cards) don’t fully apply to student loans, or they apply in different ways. This can vary by country (we’ll explore the US and UK specifics shortly).

• Repayment Terms: Student loans frequently have unique repayment terms – such as income-based repayment or deferred payment until after graduation – that differ from standard consumer loans.

• Government Involvement: Unlike a personal loan from a bank, student loans are often part of government-backed programmes (especially in the US and UK). This involvement means the “lender” isn’t always a private company; it could be the Department of Education in the US or the Student Loans Company in the UK, which changes the legal dynamics.

• Bankruptcy Rules: A critical difference is how student loan debt is treated if you declare bankruptcy. Generally, most consumer debts can be wiped out (discharged) in bankruptcy proceedings. Student loans, on the other hand, are famously difficult – and sometimes impossible – to discharge through bankruptcy, as we’ll discuss in detail below​.

In essence, student loans straddle a line: on paper, they are consumer debt (you borrowed money for personal education, not for running a business), but they aren’t always treated the same way as other consumer debts by laws and lenders.

This dual nature is why the question arises in the first place – people sense that a student loan behaves differently than a credit card balance.

To fully answer whether student loans are considered consumer debt, we need to examine how they are treated legally and financially.

Does the law categorise them as consumer credit? Do they show up on your credit report like other debts? Can a student loan lender come after you in the same way a credit card company might if you don’t pay?

Let’s break it down by looking at the United States and the United Kingdom in turn.

Keep in mind, no matter where you are, understanding the nature of your student loan can empower you to manage it more effectively. So, let’s start with the U.S. perspective, where student debt has become a huge issue in recent years.

2.1 Student Loans in the United States: Legal and Financial Treatment

The United States has a well-known student debt crisis – Americans owe roughly $1.7 trillion in student loans as of the mid-2020s​, spread across tens of millions of borrowers.

Student loans in the U.S. come in two main flavours: federal student loans (issued or backed by the government) and private student loans (from banks or private lenders).

Both types are generally considered personal consumer debts, but there are special rules and protections (or lack thereof) to be aware of.

2.1.1 Are Student Loans Legally “Consumer Debt” in the U.S?

Legally speaking, student loans in the U.S. are indeed treated as a type of consumer credit obligation. They fall under many of the same laws that govern other consumer debts, with some exceptions:

Truth in Lending Act (TILA): Private student loans (from commercial lenders) are typically subject to TILA disclosures, meaning lenders must clearly inform borrowers of the terms, interest rates, and costs – similar to any personal loan.

Federal student loans have their own disclosure rules under the Higher Education Act 1965, but the spirit is similar: you should know what you’re signing up for.

Fair Credit Reporting Act (FCRA): Under the FCRA, student loans are reported to credit bureaus just like other debts. If you have a student loan, it will appear on your credit report alongside things like credit cards or auto loans.

This means your payment history on student loans can impact your credit score – paying on time can help build credit, while missing payments will hurt it. Negative information (like a default on a student loan) usually can stay on your credit report for up to seven years​, as FCRA rules dictate for most debts.

In fact, Section 605 of the FCRA, and Section 430A of the Higher Education Act 1965 work together to ensure that student loan defaults are removed after 7 years in most cases​. In short, yes, student loans show up on credit reports and follow the standard credit reporting timeframes.

Fair Debt Collection Practices Act (FDCPA): This Act protects consumers from abusive debt collection. It applies to third-party debt collectors of consumer debt.

If you were to default on a private student loan and it’s turned over to a collection agency, that agency must abide by FDCPA rules (no harassing calls at 3 AM, for example). For federal loans, collections are often handled by contracted agencies, which also should follow these rules.

So in this sense, your student loan debt is treated like other consumer debts if it goes to collections – you have rights and protections.

So far, so good: from the analysis above, student loans resemble other consumer debts in reporting and general legal framework. However, the big legal distinction in the U.S. comes with bankruptcy.

2.1.2 Bankruptcy and Student Loans in the U.S.

If you get in over your head with credit cards or other unsecured consumer debt, filing for bankruptcy can offer a fresh start by discharging (wiping out) those debts. Student loans are a glaring exception to this.

Under U.S. law, student loan debt (whether federal or private) is not automatically dischargeable in bankruptcy. The U.S. Bankruptcy Code (11 U.S.C. 523(a)(8)) carves out student loans and requires a showing of “undue hardship” to discharge them.

In practice, discharging student loans via bankruptcy is very difficult – it requires filing a separate lawsuit within the bankruptcy (an adversary proceeding) and convincing a judge that repaying the loan would impose an undue hardship on you and your dependents.

The standard is notoriously hard to meet (courts often use tests like the Brunner test to evaluate your hardship). As a result, most borrowers cannot get rid of student loans in bankruptcy.

This is a crucial difference from typical consumer debt. If you have a mountain of credit card debt, bankruptcy law gives you a clear path (albeit with consequences) to have that debt forgiven. With student loans, Congress has, for decades, made it deliberately harder to walk away from the debt.

The policy rationale has been that since education is an investment in yourself, and loans often have government subsidies, allowing easy bankruptcy discharge might encourage abuse.

There is ongoing debate in the U.S. about whether these strict rules should be loosened, but for now they remain in place.

For borrowers, this means student loan debt sticks with you in almost all circumstances. You can’t simply declare bankruptcy and expect your slate to be wiped clean.

It’s a debt you must plan to repay or manage through other means (such as loan forgiveness programmes or income-driven repayment plans, if you qualify).

2.2 How Student Loans Are Repaid in the US (and Government Involvement)

In the U.S., if you have federal student loans, you typically begin repayment after leaving school (following a grace period). These loans come with a variety of repayment plans, including standard 10-year repayment or income-driven plans that adjust your payment based on your earnings.

The terms of federal loans are set by legislation and federal regulations. Interest rates are fixed (set by Congress for each academic year’s loans) and can be lower than some private loans, but higher than subsidised UK loan rates in many cases.

The U.S. Department of Education is deeply involved – it either directly lent you the money (in the case of Direct Loans) or guarantees the loan (in older bank-issued federal loans).

Because the government is the creditor for federal loans, it has powerful collection tools that ordinary lenders don’t. For example, if you default on a federal student loan, the government can garnish your wages or seize tax refunds without a court judgment.

This is very different from a credit card company, which would usually have to sue you and get a court order before garnishing wages.

In that sense, federal student loans are consumer debts with an extra bite – the government acts both as lender and debt collector, with statutory powers to recoup the debt.

Private student loans (from a bank, credit union, or online lender) behave more like typical consumer debts. If you default on a private student loan, the lender would have to follow normal legal procedures to collect (and they can’t directly tap your tax refund or wages without suing).

Private loans often have higher interest rates and fewer flexible repayment options compared to federal loans. But note: even though they are private, the bankruptcy discharge issue applies to them too in the U.S., thanks to that same Bankruptcy Code section.

Credit Reporting: Both federal and private student loans will appear on your credit report. Keeping them in good standing (making on-time payments or properly deferring them if you go back to school) helps maintain your credit.

If you default, it will severely damage your credit score, just like defaulting on any loan. The default notation can remain for 7 years​, and rehabilitation of federal loans (a programme to get out of default) can remove the default from your report once completed.

Consumer Protection Laws: Student loans are subject to consumer protection laws, but with nuance. For instance, the Fair Credit Reporting Act ensures your student loan servicer reports accurate information, and you have the right to dispute errors on your credit report.

The Fair Debt Collection Practices Act will apply if a private collection agency is hounding you for payment – they can’t threaten or lie, just as if they were collecting a credit card debt.

Additionally, there’s the Fair Credit Billing Act and others, but those mostly pertain to credit cards and open-ended credit, not instalment loans like student debt.

In summary, the U.S. treats student loans as consumer debt in most regards (credit reporting, lending laws, etc.) but carves out special treatment in critical areas like bankruptcy and collections.

The result: if you’re an American with student loans, you should regard them as a significant part of your personal debt load, to be managed with care. They are no less “real” than a credit card balance – in fact, they can be more burdensome because you can’t easily escape them if times get tough.

2.3 Practical Implication for U.S. Borrowers

Treat your student loans as a top priority in financial planning. While they often have lower interest rates than credit cards, the consequences of default are severe and long-lasting.

Always explore options like income-driven repayment plans if you are struggling, rather than ignoring the debt. Remember that your student loan status will follow you on your credit report, so staying current is key to keeping a healthy credit score.

And if you ever consider bankruptcy as a way out of debt, know that student loans likely won’t be part of that exit plan (barring extreme hardship).

This knowledge can help you make informed decisions about budgeting, career, and even life choices (like whether to seek loan forgiveness through public service, etc.).

Now that we’ve covered the U.S., let’s turn to the United Kingdom – where the student loan system is quite different in structure, even if the fundamental question of “are student loans considered consumer debt?” still arises.

3. Student Loans in the United Kingdom: Legal and Financial Treatment

If you are a student or graduate in the UK, you have probably noticed that conversations about student loans sound very different from those in the U.S.

In Britain, student debt is often described as being more like a “graduate tax” than a conventional loan. Let’s unpack what UK student loans really are and how they fit (or don’t fit) into the concept of consumer debt.

3.1 The UK Student Loan System at a Glance

Most student loans in the UK (particularly in England and Wales – Scotland and Northern Ireland have some differences in fees and loans, but the broad strokes are similar) are provided through the Student Loans Company (SLC), a government-backed organisation.

These loans cover tuition fees and often maintenance (living costs), and repayment is income-contingent – meaning you only repay when your income is above a certain threshold, and repayments are a fixed percentage of your income over that threshold.

The loans also carry interest, typically tied to inflation (e.g., the Retail Price Index) with an additional percentage depending on your income.

Key features of UK student loans (for loans taken out in recent years) include:

• No repayments if you earn under a threshold (for example, under Plan 2 loans, you begin repaying 9% of your income only above around £27,000 per year – this threshold can change with policy).

• Automatic payroll deduction: If you are employed in the UK, your student loan repayments are taken out of your salary automatically by HM Revenue & Customs, just like income tax or National Insurance. This feels more like a tax withholding than paying a bill.

• Loan forgiveness (write-off): The loan isn’t endlessly hanging over you – any remaining balance is typically written off after a set period (for instance, 30 years after you were due to start repaying – depending on your plan, under current rules for many loans), or earlier in some cases like if you become permanently disabled and unable to work. In essence, if you don’t manage to pay it all off within 30 years, the rest is forgiven.

Because of these features, many in the UK view student loan debt as a different system from traditional debt. It is frequently said that “you shouldn’t think of it as a normal debt.”

It appears more like an extra tax on high earners (graduates who do well will pay back most or all of their loan plus interest, whereas those with lower incomes might never repay fully before it is forgiven).

3.2 Are UK Student Loans Considered “Consumer Credit” Legally?

Here’s an interesting twist: Under UK law, most student loans are not regulated as consumer credit agreements. In fact, legislation explicitly exempts student loans from the standard consumer credit regime.

The rationale is that these loans have low interest and are provided by the government to a specific group (students), not by commercial lenders to the general public.

For example, the UK Consumer Credit Act 1974 (CCA) is the primary law that protects consumers taking out loans or credit (like requiring certain disclosures, setting rules on default processes, etc.).

However, student loans issued under the government scheme are exempt from this Act. The Sale of Student Loans Act 2008 confirmed that loans made under the statutory student finance system are not regulated by the CCA​.

They fall under a special category of “exempt agreements” because they are considered low-interest and only offered to a particular class of individuals (students)​.

In short, when you take out a UK student loan, you are not signing a typical consumer credit agreement – you are entering a contract under its own legislative framework (the Teaching and Higher Education Act 1998 and subsequent regulations, etc., govern the terms).

What does this mean in practice? A few points:

Fewer standard consumer protections: Since the Consumer Credit Act 1974 doesn’t apply, some of the formalities and protections it provides (like certain types of notices or the ability to go to a Financial Ombudsman for issues with a regulated loan) aren’t in place for student loans.

Instead, the “protections” for student borrowers come from the political process – e.g. Parliament sets interest rate rules and repayment terms.

The government can (and does) change the terms via regulations. In fact, the student loan contract explicitly states that the repayment regulations can be changed even after you have taken out the loan, which is something no normal commercial loan could do so easily.

This has raised concerns; commentators have pointed out that no bank could get away with such an open-ended clause allowing them to alter the deal unilaterally​.

Old-style loans vs. new-style: It is worth noting that older UK student loans (pre-1998 “mortgage-style” student loans) were regulated under the Consumer Credit Act. Those loans worked more like a traditional personal loan (fixed term, not income-based).

They have since been mostly paid off or sold to private companies. If you have one of those old loans, consumer credit rules apply – for instance, if you defaulted, the lender would need to go to County Court to get a judgment, just like any other personal loan debt​.

But for the vast majority of readers (with loans from 1998 onwards, which are income-contingent), the Consumer Credit Act protections don’t apply. Instead, the oversight is through the government’s own mechanisms.

So legally, UK student loans are not classified as standard consumer debt in the way that, say, a bank loan or credit card is. They occupy their own category.

Despite that, they are still a personal debt you owe – it’s just that the “creditor” is the government and the rules of the game are different from typical credit.

3.3 Credit Reporting and UK Student Loans

One striking difference for UK borrowers: your student loan does not appear on your credit report in the UK. Credit reference agencies (like Experian, Equifax, TransUnion in the UK) do not include the balance or payment status of Student Loans Company (SLC) loans on their credit files​.

This means that having £50,000 in student debt doesn’t directly lower your credit score, and missing a student loan payment won’t show up as a black mark on a credit report in the same way a missed credit card payment would.

Why? It goes back to the nature of the repayment system. Since repayments are automatically taken via payroll (or self-assessment for the self-employed), there isn’t a concept of “missed monthly payments” – you pay through tax if you are supposed to, and if you’re not earning enough, you simply don’t pay and that’s not considered a default.

The system is structured so that you technically can’t fall behind in the same way; you either pay because your income triggers it or you don’t owe because your income is low.

There’s no equivalent of a late payment fee or delinquency until perhaps you’re supposed to repay but fail to (e.g., if you move abroad and don’t arrange payments, then you could be considered in arrears).

Even then, it is handled by the SLC and potentially the courts, not by reporting to credit agencies.

3.4 Student Loan Implication for UK Students

Future lenders (like if you apply for a mortgage) won’t see a student loan on your credit file. However, mortgage lenders in the UK do ask if you have a student loan and factor the monthly deduction into affordability calculations.

So indirectly it matters – a student loan will reduce your take-home pay, thus affecting how much mortgage you can afford – but it won’t affect your credit score.

This is one reason many say UK student debt is “softer” debt; it quietly siphons a bit of your income without staining your credit history.

3.5 Bankruptcy and Student Loans in the UK

Another crucial point: you generally cannot get rid of a UK student loan by declaring bankruptcy. Under UK insolvency law, certain debts are excluded from bankruptcy relief, and student loans are one of them.

They are classed as “non-provable debts” in bankruptcy – meaning they aren’t written off when you’re discharged from bankruptcy​. If you filed for bankruptcy in England or Wales, your liability to repay your student loan would remain (similar to how child support or court fines aren’t wiped out).

The logic is that since the loans are funded by taxpayers and have forgiveness built-in after a period, it wouldn’t be appropriate to allow immediate write-off through bankruptcy.

This rule was tightened in 2004; before that, there was a brief window where some graduates actually did go bankrupt to clear their student loans (back when loans were smaller and the law was less clear). The government quickly closed that loophole.

Now, much like in the U.S., you are stuck with the student loan until it is repaid or forgiven by its own terms. Bankruptcy won’t save you from it.

The big picture in the UK is that while student loans are technically a personal debt you owe, they are designed to be relatively hands-off and unobtrusive unless you’re a high earner (in which case you pay more, but presumably can afford to).

They don’t affect your credit score, and repayment is automatic and contingent on income. Legally, they sit outside ordinary consumer credit law.

In everyday life, many graduates barely notice the loan except as a line on their payslip. Some even question whether it should be called a “debt” in the traditional sense, given the built-in forgiveness and income link.

However, it’s not free money. You do owe this money, and if you deliberately try to avoid paying it (say you move overseas and never pay despite having income), the SLC can take legal action – they could obtain a court order to make you pay, which could eventually affect your credit if it led to a county court judgment. So, responsible management is still important.

Treat your student loan as a unique financial obligation. It is generally advised not to rush to pay it off early unless you have a high income and expect to repay in full before it is forgiven, or you have other reasons (because extra payments won’t reduce your monthly amount – they just reduce the overall term, which for many might be irrelevant if they’d never fully repay anyway).

Focus on other high-cost debts first (credit cards, etc.), since your student loan is relatively low-impact on day-to-day finances.

Always inform the SLC if your situation changes (like moving abroad or a name change) so they can properly manage your account – you don’t want a scenario where you inadvertently default on an arrangement.

4. Financial Implications of Student Loans Being (or Not Being) Consumer Debt

Now that we have seen how student loans are handled in the US and the UK, let us summarise some key implications of whether student loans are classified as consumer debt:

4.1 Credit Score and Credit Access

In the US, because student loans are treated like any other consumer debt on credit reports, how you manage them will influence your credit score. This can affect your ability to borrow for a car or mortgage later on.

A well-managed student loan (no missed payments) can actually boost your credit over time, demonstrating a track record of repayment. A default or delinquency will damage your credit, making other borrowing more costly or difficult.

In the UK, by contrast, student loans don’t show up on credit files, so they have no direct effect on your credit score.

UK graduates can have tens of thousands in student debt yet still have a pristine credit file – which might make it easier to get other forms of credit than it would be for a similarly indebted American borrower.

However, UK lenders will account for the monthly student loan deduction when assessing affordability (especially for mortgages), effectively treating it as a sort of fixed expense or tax. So it is not visible as a debt account, but it’s felt in your disposable income.

4.2 Psychological Impact and Financial Planning

Because student loans are often viewed through a different lens than, say, credit card debt, people may prioritise them differently.

In the US, there’s a lot of advice about paying down student loans faster, refinancing them, or qualifying for loan forgiveness programmes – treating the loans as a significant financial burden that should be tackled.

In the UK, advice often leans towards not overpaying your student loan if you have other needs, because it’s low-priority debt: if it will be forgiven after 30 years (depends on the plan), there’s less urgency to eliminate it early, especially if the effective interest is not too high after inflation.

This difference in attitude stems from how the debt is structured and perceived. If student loans are viewed as just another consumer debt, one might be inclined to aggressively pay them off; if they are viewed as a quasi-tax, one might just let them run their course.

4.3 Legal Protections and Recourse with Student Loans

Being classified (or not) as consumer debt affects what legal tools you and the lender have. For example, in the UK the lack of CCA regulation means you can’t, say, request a copy of your “CCA agreement” to scrutinise for errors (a common tactic some debt advice will suggest for other loans) – that concept doesn’t apply.

In the US, being a consumer debt means you do get the benefit of laws like the FCRA and FDCPA. You have rights to fair treatment and accurate reporting, and you can dispute mistakes (for instance, if a student loan you paid off is still showing as owing on your credit report, FCRA gives you the right to dispute that and have it corrected).

For federal loans, there are also special forbearances and discharge options (like disability discharge, or forgiveness after 20-25 years on certain plans) which aren’t exactly consumer debt features but are policy features designed to alleviate the burden.

4.4 Collections and Enforcement of Student Loans

When a debt is consumer debt, normally a lender has to use standard enforcement (calls, letters, court actions). We saw that in the US, federal student loans break from this mold by allowing administrative wage garnishment and tax refund offsets.

So student loans can actually be harder to dodge than normal consumer debts in the US.

In the UK, the enforcement is mostly through the tax system (which is automatic) and, if needed, normal legal channels for those who don’t pay when they should.

Neither system lets you avoid the debt easily, but the methods differ. Importantly, because both US and UK student loans are not easily dischargeable in bankruptcy, they have a kind of super-debt status: they will follow you even if you hit financial rock-bottom, unlike credit card bills or other loans that a bankruptcy could erase.

This has long-term financial implications – for example, an American with overwhelming debt who declares bankruptcy may emerge free of credit card and medical debt, but still have, say, $50k in student loans to tackle.

4.5 Government vs Private Student Loans

Consumer debt is usually thought of as private borrowing, but student loans blur that line because of government involvement. In the US, the majority of student debt is owed to the government.

In the UK, essentially all of it (for public student loans) is owed to the government. This means policy changes (like interest rate changes, repayment threshold moves, forgiveness programs) can significantly alter the landscape, something that isn’t as common with pure private consumer debt.

For instance, during the COVID-19 pandemic, the US government temporarily paused federal student loan repayments and interest – an extraordinary intervention you wouldn’t see for, say, credit card debt. In the UK, the government can and does adjust interest rates or thresholds annually.

So one implication of student loans being in a special category is that politics and government decisions play a big role in your debt, which is less true for typical consumer debts.

5. Managing Student Loan Debt in the U.S. & UK

Whether you are in the US or UK, having student loans means you need to be smart about managing them alongside your other finances. Here are some tips and considerations, keeping in mind the consumer debt context we’ve discussed:

5.1. Know the Terms of Your Loan

It sounds basic, but many borrowers don’t fully understand their student loan terms. Make sure you know your interest rate, whether it is fixed or variable, and what the expected timeline for repayment is.

In the US, interest rates are fixed for federal loans taken each year, and they can range widely (around 3-7% in recent years depending on loan type and year).

In the UK, know which Plan you’re on (Plan 1, Plan 2, Plan 4, or the new Plan 5 or postgraduate loan) as that determines your threshold and interest. The more you know, the fewer surprises down the line.

5.2 Treat It as Real Debt in Your Budget

Even if you feel your student loan is unlike a credit card, it still demands a portion of your future income. Build your budget with your student loan payments in mind.

In the US, that means accounting for the monthly payment (or anticipated payment if you’re still in the grace period).

If the payment is too high relative to your income, look into income-driven repayment plans – these can reduce your payment to a manageable percentage of income (and remember, any forgiven balance at the end of these plans might be taxable under current law, which is another quirk to plan for).

In the UK, you don’t have to budget for a monthly payment if you’re on PAYE since it’s taken automatically, but be aware of it when assessing your take-home pay.

If you’re self-employed or working abroad, you do need to budget for the quarterly or monthly payments you should make to SLC.

5.3 Prioritise Higher-Interest and Unforgivable Debts

If you have multiple debts, a common strategy is to prioritise those with the highest interest rates or those that can grow out of control.

For many in the US, credit card debt or personal loans have higher interest than student loans, so it makes sense to pay those down first while paying at least the minimum on student loans.

Student loans are relatively low-interest and have more flexible terms (especially federal loans with income-based plans or deferment options).

Plus, you can’t discharge student loans in bankruptcy, but you can discharge credit card debt – ironically, that might encourage you to tackle the student loan since it’s always going to be there. It’s a balance to consider.

In the UK, the interest on student loans is linked to inflation, so in real terms the cost can be moderate (and if inflation spikes, effectively you might pay back less in real terms).

It has been suggested not to make extra voluntary payments on UK student loans unless you are very likely to repay the whole loan and have surplus cash, because extra payments won’t reduce your current monthly outgoings, they only shorten a term that might already be cut short by forgiveness.

Instead, you might invest that money or put it toward a home deposit, for instance.

5.4 Take Advantage of Forgiveness or Assistance Programs

Because student loans are such a public issue, there are programmes to help borrowers that have no parallel in other consumer debt.

In the US, look into Public Service Loan Forgiveness (PSLF) if you work in government or nonprofit jobs – it can forgive federal loan balances after 10 years of qualifying payments.

There are also teacher loan forgiveness programmes, military service benefits, and occasional one-time relief measures.

Keep an ear out for legislative changes too; for example, proposed reforms could alter bankruptcy rules or introduce new forgiveness options. In the UK, there isn’t a direct equivalent of PSLF because the system already has forgiveness built-in after 30 years.

But staying informed on policy changes is useful – for instance, the Plan 2 threshold was frozen for a while, effectively increasing repayments for some; knowing that could influence your career or financial plans.