Student Loan Repayments

[Josh111]

I also postd this in the Business and Finance section as I am not sure which is considered the more appropriate forum. I hope nobody minds.

Like most other students, I had to get a student loan for my time in Uni. Immediately after leaving Uni, I left the UK to live in another EU country teaching English. I never informed any UK authorities about this, I just left. (I honestly do not know if you are meant to declare if you leave the UK, if so, to whom?). I pay taxes/national insurance in the country I now live in. To be honest, until a couple of months ago, I completely forgot about my student loan but now it's playing on my mind a little. I earn marginally (very marginally!) over the threshold for repayment. But given what they take back, this is disproportionate to my income and considering other loans from banks I have to repay, I will be left with very little to live on if the SLC take from me too. My questions are these: if you were in my position, would you just leave it and stay quiet (I have never been asked for repayment (nothing has ever been sent to my UK home address where my parents live) and i live abroad). Does anybody know if I would face a huge interest amount in addition to the loan for the time I haven't paid back the student loan? Is it at all possible to negotiate the amount you pay back- i.e. is the slc flexible on repayment? I look forward to hearing from you (please dont judge me too much! :-) ).

[buildersmate]

First stab at answering in the other thread, in Business and Finance.

[bednobs]

can't you ring them and ask without giving any details?

[tamborine]

lie low.....or risk paying back my hard-earned taxes !

[sfdoctor]

Hi Josh,

To answer your first question, it’s best to declare your earnings. This is because....

• The SLC can fine you up to £3,000 for avoiding paying back your loan (admittedly this is unlikely, and I know of people who graduated 10 years ago and still haven’t paid anything back despite earning well over the threshold).

• If you have tax statements and you are only just earning over the £15,000 you won’t be paying much back. Remember, you only pay 9% of what you earn over £15,000. So if you earn £16,000 in one year, your total repayments for that year would only be £90.

With those two points in mind, I don’t think it’s worth the risk avoiding making the repayments.

You will be charged interest on the time you haven’t made any repayments, and that interest will continue to be charged even when you are making repayments. However, the interest is currently very low on student loans if you graduated after 1998. Last year the interest rate was 0%, and this year coming, the rate will be 1.5%, so not much in comparison to a bank or credit card.

The SLC aren’t flexible on how you repay it though. In fact it’s actually HMRC who take the money from you, and then pass it on to the SLC.

Student Loans are by far the cheapest form of borrowing you’ll ever have, and compared to your other loans there’s minimal pressure to repay them. So, if you lose your job don’t earn any money, they won’t coming knocking on your door (unlike a bank). Therefore, don’t worry too much about it!

Andy
studentfinancedoctor.com

[sfdoctor]

Hi Josh,

To answer your first question, it’s best to declare your earnings. This is because....

• The SLC can fine you up to £3,000 for avoiding paying back your loan (admittedly this is unlikely, and I know of people who graduated 10 years ago and still haven’t paid anything back despite earning well over the threshold).

• If you have tax statements and you are only just earning over the £15,000 you won’t be paying much back. Remember, you only pay 9% of what you earn over £15,000. So if you earn £16,000 in one year, your total repayments for that year would only be £90.

With those two points in mind, I don’t think it’s worth the risk avoiding making the repayments.

You will be charged interest on the time you haven’t made any repayments, and that interest will continue to be charged even when you are making repayments. However, the interest is currently very low on student loans if you graduated after 1998. Last year the interest rate was 0%, and this year coming, the rate will be 1.5%, so not much in comparison to a bank or credit card.

The SLC aren’t flexible on how you repay it though. In fact it’s actually HMRC who take the money from you, and then pass it on to the SLC.

Student Loans are by far the cheapest form of borrowing you’ll ever have, and compared to your other loans there’s minimal pressure to repay them. So, if you lose your job don’t earn any money, they won’t coming knocking on your door (unlike a bank). Therefore, don’t worry too much about it!

Andy
www.studentfinancedoctor.com