Moneysavingexpert's Martin Lewis explains why it doesn't matter if your student loan is £30,000 – or £3m

Politicians, students and their parents have obsessed over the size of university loans for years, particularly since tuition fees rose to more than £9,000 a year.

But, Moneysavingexpert founder Martin Lewis told the Telegraph's It's Your Money podcast, for most people "the amount you borrow is a complete irrelevance".

As he explains in this week's episode on student finances, the loan system is better described as graduate contribution scheme. This is because graduates only pay back (at a rate of 9pc) what they have borrowed on earnings above £25,000.

After 30 years the debt is wiped – and it is thought fewer than two in 10 graduates will clear their "debt" before this cut-off point.

Mr Lewis also told students to have an awkward conversation with their parents; how much they can borrow is dependent on the family's income, which means they might need a top-up.

And ever wondered how a money saving expert juggled his finances at uni? Well Mr Lewis reveals all.

In this episode, Sam and Laura also discuss how to avoid being snared by banks looking for customers for life, working while studying and dodging the monthly splurge.

How student loans work

Once you leave university, you only repay when you're earning above £25,000 a year – and this is rising to £25,725 in April.

Then it's fixed at 9pc of everything you earn above that.

So if you earn £26,000 in a year, you repay £90 (£26,000 is £1,000 above the threshold and 9pc of £1,000 is £90).

If you earn £35,000, you repay £900 which is 9pc of the £10,000 above the threshold.

It’s all handily repaid through your employer's payroll just like income tax. So once you're working, it's deducted from your salary before you get it.

You stop owing either when you've cleared the debt, or after 30 years (from the April after graduation) whichever comes first. If you never get a job earning over the threshold, you won't have repaid a penny.

You can overpay, which on a typical loan would be sensible because it means paying less interest overall. But because of how repaying student loans works, you might be better off just paying the minimum.

Here’s why.

Pension company AJ Bell worked out that a starting salary of £27,500 is the break-even point where the amount you will repay over 30 years equals the amount you have borrowed.

There is a loan for living costs, too.

Known as maintenance loans, these are usually paid in three termly instalments direct to your bank account.  The loan is repaid in exactly the same way as the loan for tuition fees (ie, 9pc of everything earned above £25,000).

There’s one crucial difference between this loan and the one for tuition fees. The living loan is means tested. Martin talks about why this is so important in the episode.