Should you help your child repay their student loan?

New graduates across the UK will be preparing for the rigours of working life and the extra financial responsibilities it brings - because on top of rent, bills and the odd night out, their salary may soon also have to cover student loan repayments.

Many parents may be tempted to help their children repay the loan. But is this wise? Or should you take a tough-love approach and leave them to it? Here we guide you through the inner workings of the student loan repayment system to help you decide which approach to take.

When do repayments start?

Your child won't have to start paying back their loan until they're earning above £15,000 a year – the equivalent of £1,250 a month or £288 a week – and even then repayments won't begin until the April following graduation.

How are repayments made?

If they are on a pay roll, the deductions will be made automatically. Those who plan to work overseas must contact the Student Loans Company (SLC) to make payment arrangements, while the self-employed will have to fill in a self-assessment document.

How much are the repayments?

Monthly payments are pretty minimal: 9% of any earnings above the £15,000 threshold. So someone earning £16,000 would pay just £7.50 a month.

Is there any interest?

Compared with bank loans, the amount of interest payable on student loans is very small. It's currently set at 1.5%, with the rate, set on an annual basis, linked to whichever is the lower: the retail prices index (inflation) or the Bank of England base rate plus 1%.

The new rate will be confirmed in August. Given the current low base rate, it's likely to remain at a similar level. So, if your offspring have other debts to pay back, these are likely to have higher interest charges than their student loan, and it would make more sense for you to help them with these.

Alternatively, you could help out with the deposit for their first home.

Can you stop repayments to clear more expensive debts first?

If your child is earning above the threshold, the answer is 'no'. Again, you may want to help them pay back any bank loans or clear credit card debts as a priority. It's your call, of course, but there's no way of halting student loan repayments.

Is it possible to clear the loan more quickly?

Yes: you can make additional voluntary payments online or by setting up a direct debit with the SLC. Alternatively, you can post a cheque with the relevant student reference number on the back. Go to slc.co.uk for more details.

Bear in mind, however, that as a third party you can't contact the SLC directly. Even if your child is planning to go away for a while, they'll need to notify the SLC themselves. Data protection rules forbid the company to discuss personal loans with anyone but the recipient. You can only handle your child's finances on their behalf if you have Power of Attorney for them.

Can the loan ever be written off?

In the unfortunate event that your child finds themselves permanently unable to work, their loan will be written off. But if anyone who continues to earn above £15,000 has an accident or a change of circumstance, it's still a 'no'.

However, if the loan still isn't fully repaid after 25 years, the remaining balance will be written off.