How does student loan debt work?
Student loan debt (the combination of your maintenance loan and tuition fee loan) is very different from "regular" debt, and there are a number of measures in place to help you manage repayment.
You only begin repaying your student loan once you earn over a certain amount each year. At the moment, this income threshold is £25,000. As many graduate jobs pay less than this, you may not have to pay anything for a while after leaving university.
How much you repay is also entirely dependent on your salary: you only pay back 9% of whatever you earn above £25,000, so there's no risk of random repayment increases. If your circumstances change and your salary drops back under the threshold, or you become unemployed, your repayments stop. This means your repayments will always be affordable, since they're linked directly to your income. It's often psychologically easier to think of your student loan repayments as tax-like in this sense, rather than as a conventional debt.
Keep in mind that the government can retrospectively change student loan terms at any point, even if you signed your contract years ago. However, any major changes would be widely reported, so as long as you keep up with current affairs, it's unlikely that terms will change without you knowing.
Will your student loan debt ever be wiped?
Your student loan debt is wiped after 30 years. So even if your income hasn't been high enough to pay it back in full, it will be cleared after this point regardless of the interest accumulated. The Institute for Fiscal Studies has estimated that more than 70% of students will never pay their loan back in full. The only people who tend to repay everything within 30 years are those who move straight into high-salaried jobs after graduation, or those who didn't need a maintenance or tuition fee loan in the first place.
What do you need to know about your overdraft?
Unlike your student loan, your overdraft doesn't wait. Most student bank accounts offer an interest-free overdraft while you're at university, letting you spend more than you have in your account. When you graduate, your account is automatically converted into a graduate account, which will usually still offer 0% interest, generally tapering off over the two years or so after your degree ends.
First, find out exactly how long you can keep your 0% interest overdraft for under your specific graduate account terms, and how much of your overdraft you've used, or plan to use, before final year ends. If you've left university with a maxed-out overdraft (which can be up to £3,000, depending on your credit rating), this can be an additional source of stress alongside your student loan.
You should also make sure you understand your repayment conditions before accepting a graduate account, since failing to pay off your overdraft in time will usually result in fees.
Where should you start clearing it?
Budgeting should be your first port of call, since it just requires the money management skills you've hopefully picked up over your time as a student. This is especially straightforward if you've landed a graduate job and will start earning right away.
Work out how long you have to pay off your interest-free overdraft under the terms of your graduate account, then divide the amount owed over this time. This gives you the minimum amount you need to pay monthly. You can then either set up a direct debit if your wages go into a separate account, or simply note down the amount in your graduate account that you can't spend. Spreading repayments over the maximum time available like this should help avoid cutting too much out of any single paycheck.
If you have money in a separate savings account, you could also drip-feed it into your overdraft repayment rather than parting with it as a lump sum. Just make sure you keep some back for unforeseen financial trouble before spending your remaining savings on a big graduate holiday. You don't want to come up short once your 0% interest period ends.
Should you consider transferring accounts?
You don't necessarily have to stay with your current bank for your graduate account. While this is sometimes the best option, it's worth shopping around to check whether other banks offer a better graduate account deal, including the option to transfer your existing overdraft. If a competitor offers a longer interest-free period, transferring could give you one or even two extra years to spread out your repayments interest-free.
Whichever way you decide to manage your student debt, the most important thing is having a clear plan of action so you don't end up in more debt than you started with.