The debt hangover from going to university is steadily getting worse.

Latest figures show students who started higher education before 2012 graduated with an average debt of around £23,000. Those who started after this date – so after the tuition fee limit increased to £9,000 a year – could rack up debt closer to the £50,000 mark.

With such eye-watering figures, it’s hardly surprising that some graduates may consider using any spare cash to pay off their debt sooner.

A reader recently contacted YourMoney.com asking whether she should pay off her student loan after coming into some money.

Below we reveal the facts and assess whether there may be a better use for her windfall (*this article looks at the rules for a student who lived and studied in England only).

When you start university determines how much you repay

If you started your university course before 1 September 2012, you’ll only need to start repaying your loan the April after you complete or leave your course.

You come under the Repayment Plan 1 group and you’ll only start repaying your student loan if your income is over £17,495 (before tax) per year – that’s broken down as £1,457 a month or £336 a week. The amount you’ll have to pay is 9% of anything earned above £17,495 per year.

If you started your university course on or after 1 September 2012, you’ll also only need to start repaying your loan the April after you complete or leave your course, though the amount varies.

You come under the Repayment Plan 2 group and you’ll only start repaying your student loan if your income is over £21,000 (before tax) per year – that’s broken down as £1,750 a month or £404 a week. The amount you’ll have to pay is 9% of anything earned above £21,000 per year.

The government previously said the £21,000 threshold would rise each year with graduate earnings, but it’s actually been frozen until 2021, when a rise is expected.

What interest is applied and when is the loan wiped?

The current interest rate for Plan 1 graduates is 1.25% while for Plan 2 graduates it is the current Retail Price Index (RPI) + up to 3% dependent on earnings (1.6% and 4.6%). The loans accrue interest from the day they are paid.

The loan will be wiped out after 25 and 30 years respectively and if you never earn above those threshold amounts then you won’t have to pay back your student loan.

Are there penalties for repaying more?

If you want to clear your debt early, there are no penalties.

Should I repay more of my student loan?

Jake Butler, operations director of Save the Student, says nine out of 10 times it probably doesn’t pay to clear it early.

“I would generally say this money could be better used elsewhere,” he says.

“However, if you strongly believe that you’ll be set to pay off the whole of the loan before the 30-year cut off point [or 25-year] and don’t have any other debts or need for the money you’ve come into then paying it off early will save you the interest.”

Campaign site Which? says for many, overpaying the 2012+ student loans will be “money down the drain” as a significant number won’t pay the entire loan before it’s wiped.

Further, a major review into university funding in 2010 estimated that around 60% of graduates won’t have paid their full loan back after 30 years.

“Student loan debt is considered the cheapest long-term debt you can have. It might be better to put any large amounts of money into a high interest savings account instead of towards your loan,” Which? says.

Is there anything else to consider?

Student loans are not recorded on your credit file so won’t affect your chance of getting a credit card, loan or even mortgage.

The only thing to bear in mind is that many mortgage providers now look at all of your outgoings so they may take your student loan into account for affordability checks.