Repaying your Student Loan
As a recent graduate, you are likely to be presented with many new opportunities, perhaps even a new career and therefore a significant lifestyle change. Yet amid all these changes it is important to prepare for repaying your loan, including the interest which will have accumulated during your studies.
Usually, repayments are not required until the April after your graduation, nor until you are earning an annual income of at least £15,000. At this point, your loan contributions will be equivalent to nine percent of your salary. If however, you wish to pay off your loan more quickly, it is possible to make larger, individual payments at any time without a financial penalty.
You are not likely to fail to make loan repayments, since they are automatically deducted from your salary by your employer through the Pay As You Earn scheme (PAYE), alongside your tax and National Insurance payments. At this point, the role of the Student Loans Company (SLC) is minor: they are only informed of your total repayments at the end of the financial year. It is therefore possible to 'overpay' if your earnings drop below £15,000 at any point during the course of the financial year, and you may request a refund of the amount that you have overpaid.
If you decide to live and work abroad after graduation, payments must instead be made directly to the Student Loans Company, because you will no longer be governed by the UK tax authorities. The income threshold at which you are required to make repayments may also be higher or lower than £15,000, in order to compensate for the difference in living costs in other countries.
Should you to return to higher education to study a second degree at a later stage and be granted another student loan, your existing loan repayments will be suspended until you have graduated for the second time and are required to make repayments again. However, if your yearly income exceeds £15,000 as a student, you must continue to pay off your initial loan.
You will not have to make repayments if your annual salary does not reach the income threshold of £15,000 for twenty-five years after your graduation, or thirty-five years if you are from Scotland. After this time, your outstanding debt is written off by the Student Loans Company.
Your debts will also be cancelled if you die, or become permanently disabled and are no longer able to work as a result.
