Taking out a student loan feels like an unavoidable part of university life. With tuition fees, rent, and everyday living costs piling up, borrowing money can seem like the only way to get through your degree. After all, isn’t student debt "good debt" that everyone eventually pays off?
That’s what we’re told. But the reality is that student loans aren’t always as straightforward as they seem. Many students take out extra loans without fully understanding the long-term consequences, assuming they’ll deal with it later. The problem is, "later" can mean years—or even decades—of repayments that affect your financial future long after graduation.
Before signing up for more debt, it’s important to know exactly what you’re getting into. Student loans may be necessary, but they can also be a trap if you’re not careful. Understanding how repayment works, the impact on your credit, and whether borrowing more is really worth it can help you make smarter financial decisions while still getting the most out of your university experience.
How Student Loans Work (And Why They’re Different from Other Debt)
Unlike a typical bank loan, student loans come with lower interest rates and don’t require immediate repayment. In the UK, repayments are income-based, meaning you only start paying back your loan once you earn above a certain threshold. If you never reach that threshold, you may never have to repay the full amount.
This system makes student loans feel less intimidating than credit card debt or personal loans. However, what many students don’t realise is that interest starts accruing from the day the loan is issued—not when you graduate. By the time you finish your degree, the amount you owe will have grown significantly, even if you haven’t made a single payment.
Another key difference is that student loans don’t directly impact your credit score the way other loans do. This means having student debt won’t stop you from getting a mortgage or car loan later on. However, it does affect how much you have left to spend each month, which can influence your overall financial freedom.
The Hidden Costs of Borrowing More
It’s easy to think of student loans as "free money" while you’re at university, but the more you borrow, the longer it will take to pay off. While it may not seem like a big deal now, your future self might feel differently when repayments start cutting into your monthly income.
One of the biggest mistakes students make is borrowing beyond what they actually need. Loans are designed to cover tuition fees and basic living costs, but many students take out extra loans to fund nights out, holidays, or unnecessary expenses. While it’s tempting to enjoy the money now, that short-term comfort can turn into long-term regret when repayments stretch into your 40s and 50s.
Another factor to consider is interest rates. While UK student loan interest rates are lower than commercial loans, they are still higher than inflation. This means that unless you start making large repayments early on, the amount you owe could continue to rise instead of decreasing.
Will You Actually Have to Pay It All Back?
One of the most confusing aspects of student loans is that many graduates never pay back the full amount. In the UK, student loans are written off after a certain period (typically 30 years), meaning if you don’t earn enough over your career, you may never have to repay everything you borrowed.
However, this doesn’t mean borrowing more is a good idea. If you land a high-paying job after graduation, you will be paying back a significant portion of your loan, and the more you borrowed, the longer those repayments will last. For some graduates, loan deductions take hundreds of pounds out of their salary every month—money that could have gone toward rent, savings, or travel.
If you’re planning on working in a lower-paid sector, such as the arts, charity work, or public services, you might not hit the repayment threshold quickly. In that case, taking on more debt might seem less risky. But if your goal is to enter a high-earning profession, borrowing extra money now could cost you thousands later.
Alternatives to Taking Out More Loans
If you’re struggling financially at university, borrowing more money isn’t the only option. Before increasing your student debt, consider these alternatives:
- Scholarships and Grants – Many universities offer bursaries and grants that don’t have to be paid back. Check what funding options are available to you.
- Part-Time Work – A part-time job can help cover living expenses without adding to your debt. Many universities also have paid student ambassador roles that fit around your studies.
- Budgeting Better – Tracking where your money goes each month can reveal areas where you can cut costs. Simple swaps like cooking at home instead of eating out or finding second-hand textbooks can save hundreds over the course of a year.
- Interest-Free Overdrafts – Some student bank accounts offer 0% overdrafts, allowing you to borrow small amounts interest-free. Just be careful not to rely on it as a long-term solution.
So, Should You Borrow More?
If you absolutely need more money to stay in university, an extra loan may be necessary. Education is an investment, and in many cases, borrowing is unavoidable. However, taking out more than you actually need can create unnecessary financial stress in the future.
Before borrowing more, ask yourself:
- Is this loan essential, or am I using it to fund a lifestyle I can’t afford?
- Are there any other financial support options I haven’t explored?
- Will I realistically be able to repay this without it affecting my quality of life later?
If you do need to take on more debt, make a plan for managing repayments after graduation. The key to avoiding the student loan trap isn’t just borrowing wisely—it’s understanding how your loans work, what they will cost you over time, and making informed financial decisions.
Final Thoughts
Student loans are often necessary, but they shouldn’t be taken lightly. While they offer a way to finance education without immediate repayment pressure, they can also become a long-term burden if not managed carefully. Understanding the real cost of borrowing—especially how interest and repayments work—can help you make smarter financial choices while still enjoying your time at university.
Money may feel like an abstract concept when you’re a student, but the decisions you make now will shape your financial future. Borrow what you need, avoid what you don’t, and start thinking about ways to reduce reliance on loans before they turn into a lifelong
Useful Resources for Student Finance Advice
- Student Finance England – Official UK government website for student loans, grants, and repayments.
- Save the Student – A great resource for budgeting tips, student discounts, and money-saving advice.
- National Debtline – Free, confidential debt advice for students struggling with loan repayments.
- MoneySavingExpert Student Loan Guide – Martin Lewis’ expert guide to understanding how student loans really work.
- Turn2us – A charity that helps students access grants and financial support they might not know about.