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How and when do I repay my student loan?
By David Malcolm
If you’ve got a loan from the government in the UK to finance your higher education course, you don’t need to start repaying it until you’ve graduated and you’re earning enough. Here’s some information about repaying student loans, with links to more details.
You get student loans from the UK government through Student Finance England, Student Finance Wales, Student Finance NI or the Student Awards Agency for Scotland, depending on where you live. However, all the loans are provided by the Student Loans Company (SLC), a non-profit making government-owned organisation set up for that purpose. How and when you repay your loans depends on when you took them out. This topic contains the following:
I took out my loan after September 1998 – how and when do I repay?
If you took out a student loan while on a university or college course that began in September 1998 or later, you have an ‘income contingent’ loan. You repay your loan differently depending on when you took it out and where you lived (or studied for EU students) at the time.
If you were funded by the authorities in:
- Scotland or Northern Ireland when you took out your loan, or you lived in England or Wales and took out your loan before 1 September 2012, you repay your loan according to ‘plan 1’.
- England or Wales when you took out your loan, and you took it out on 1 September 2012 or later, you repay your loan according to ‘plan 2’.
Plan 1: if you need to repay your loan according to plan 1, you start to repay from the April after you graduate or leave your course. You pay nine per cent of anything you earn over £15,795 (£16,365 from April 2013) before tax each year (so if you earn £20,000 a year you repay around £31 each month, or £27 each month from April 2013). If you have an employer, your repayment deductions taken directly from your pay slip. If you’re self-employed, you need to complete a self assessment form and return it with any payment each year. Depending on when you started your course and your funding body, any outstanding debt you still owe is written off after a set period, as follows:
- If you got your funding from providers in England, Wales or Northern Ireland and started your course between September 1998 and August 2006 (or were treated as such when you started your course in the 2006/2007 academic year), your outstanding debt is written off when you reach the age of 65.
- If you got your funding from providers in England and Wales and started your course between September 2006 and August 2012, or in Northern Ireland if you started your course on or after September 2006, your outstanding debt is written off 25 years after repayments begin.
- If you got your funding from the Student Awards Agency for Scotland and started your course between September 1998 and August 2005, your outstanding debt is written off when you reach the age of 65. If you started your course later than that, your outstanding debt is written off 35 years after repayments begin.
Plan 2: if you need to repay your loan according to plan 2, the repayment rules are broadly similar to plan 1, except that you pay nine per cent of anything you earn over £21,000 before tax each year (so if you earn £24,000 a year you repay around £22.50 each month), and any outstanding debt you still owe is written off 30 years after you begin repayments. No -one on this plan will begin automatic repayments before April 2016, although you can make voluntary repayments at any time.
Whichever repayment plan applies to you, if you receive a disability-related benefit and are permanently unfit for work, or you die, your loan is cancelled. For more information from the SLC, see income contingent loans.
Wales: if you took out a maintenance loan from Student Finance Wales in the academic years 2010/2011 or 2011/2012, the Welsh Government may cancel part of your loan – up to £1,500. The SLC reduces the balance of your loan when you start repaying. For more information, see Partial cancellation of student loan debt.
I took out my loan before September 1998 – how and when do I repay?
If you took out a student loan while on a university or college course that began before September 1998 you have a ‘mortgage style’ loan – sometimes called a ‘fixed term’ loan. Some of these loans were ‘sold’ to the Honours Student Loans Company (which is separate from the SLC) in the late 1990s, and their administration was transferred in 2004. However, the following repayment rules should still apply.
Once you’ve graduated or left your course and you’re earning £2,318 or more a month before tax in the UK (equivalent to £27,813 per year – this figure is for 2012/2013), you repay your loans in monthly instalments by Direct Debit. If you have:
- four or fewer loans, you repay them over 60 monthly instalments.
- five or more loans you repay them over 84 monthly instalments.
However, if your income drops below £2,318 a month you may be able to defer (postpone) your repayments. You must apply to the SLC to do this – your repayments won’t stop automatically.
In some circumstances you may have any outstanding balance written off, as long as you’re not behind on your repayments. For example, if you:
- reach the age of 50 (or 60 if you were aged 40 or more when you last took out a loan)
- become permanently unfit for work due to a disability
- haven’t paid back the full amount of your loan(s) 25 years after you start repaying.
For more information from the SLC, see mortgage style loans.
Any tips about dealing with the Student Loans Company?
If you have a student loan you’ll probably be in contact with the SLC for many years. Here’s some advice about dealing with the company:
- Keep clear records of contact with the SLC for your reference, including details of all conversations, statements and agreements by both parties, together with the name of the staff member you contacted.
- Respond to all correspondence from the SLC as quickly as possible.
- Inform the SLC in writing of any changes in your circumstances (eg your address), and ask them to acknowledge in writing that they received the information. If you don’t hear from them within a reasonable period of time, contact them again to make sure they got your letter.
- If you make any agreements with the SLC over the phone, ask them to back up the agreement with a letter. The SLC records phone calls, so they should be able to refer back to any call made within a reasonable period of time.
- If you have a mortgage style loan and you haven’t received a deferment form from the SLC at least one month before the date your payments would commence or recommence, contact the SLC as soon as possible to ask them to send another form.
- If you feel that your deferment request hasn’t been dealt with promptly by the SLC, write a letter of complaint in accordance with the SLC’s complaints procedure.
Here’s the contact information for the SLC. If you have problems with your loan, see What shall I do if I have problems with my funding?
This information was updated in March 2013. NUS provides this information in good faith and has taken care to make sure it’s accurate. However, student finance issues can be complicated, and rules change frequently. You should contact the advice centre in your students' union, college or university for support if you’re uncertain or need more help.