ExMil and stewmath,
Yes the standard student loan is taken out of your pay via a similar process to PAYE. It's taken before tax I believe, and is only taken when the person is earning more than £15,000 per year.
If the graduate is to fall below that income, the student loan repayments stop until the person earns more than £15k again.
If, however, stewmath is instead referring to another loan or overdraft from another facility, and not the one from the Student Loans Company, then yes they are going to have trouble repaying.