- What is my personal student loan position?
Confession time… I’m 40, an accountant and I’ve still not paid off my student loan. Who else is in the same boat?
I finished university in 2005 so its been 17 years of paying it off, not paying it off, debating whether to make a lump sum payment or just wait until the SLC ask for it back.
I know there are several schools of thought about student loan debt. For me it’s never been a concern. When I was 18 I knew I wanted to go to university in a city away from home. I was ready to move away (I’m the eldest of 4 and my house was loud!) and it just wasn’t possible for my parents to pay for me to go… so I got the maximum student loan, all the available top-ups and had a part-time job 20 hours per week too…. this was the only way I could afford tuition fees, accommodation, food and of course the occasional night out! I never saw it as ‘debt’ as it was a necessity. I think I view it much like a mortgage. These are the only 2 creditors I am OK with…. I pay off my credit card each month and never buy anything on finance. I’m comfortable with it.
My husband paid off his student loan as soon as he could. He didn’t want it hanging over him and definitely did see it as a debt, with interest being added each year.
As a trainee accountant, when I graduated my starting salary in 2005 was £12,500 per annum (yep… that’s not a typo!) so I wasn’t going to be paying back my student loan anytime soon…. it took a few years of employment before I started paying it back, then of course, I had my babies and my income whilst on maternity leave dropped below the threshold so another 2 full years of no repayments. Cue me setting up my business and for the first 2 years my self assessment income was below the threshold to repay… last year I had a big amount to pay and will this year too.
I checked my balance recently and there is around £3,000 still outstanding (see How do I find out my balance? below). Now that I am earning a reasonable amount again, I would imagine it will be paid off by January 2024… so just under 20 years after I graduated.
As an employee, student loan repayments are taken through PAYE each payday, when your income reaches a certain threshold (depending which plan you are on – see When will I start repaying my student loan? below).
As a self-employed person, director of a Limited Company or someone who completes a self-assessment… your income will be assessed for student loan purposes through your self-assessment too and you will repay along with your tax and NI every 31st January.
2. Which plan were you on?
There are 4 repayment plans:
Plan 1: You’re on Plan 1 if you’re an English, Welsh or EU student who started an undergraduate course anywhere in the UK before 1 September 2012
Plan 2: You’re on Plan 2 if you’re an English, Welsh or EU student who started an undergraduate course anywhere in the UK on or after 1 September 2012.
Plan 4: You’re on Plan 4 if you are a Scottish or EU student who studied in Scotland.
Postgraduate Loan: You’re on a Postgraduate Loan repayment plan if you took out a Postgrad masters or doctoral loan after 1st August 2016.
3. When will I start repaying my student loan?
You’ll only repay your student loan when your income is over the threshold amount for your repayment plan. The threshold amounts change on 6 April every year.
Your repayments automatically stop if you stop working or your income goes below the threshold.
If you have a Plan 1 student loan, you’ll only repay when your income is over £20,195 a year (before tax and other deductions).
If you have a Plan 2 student loan, you’ll only repay when your income is over £27,295 a year (before tax and other deductions).
If you have a Plan 4 student loan, you’ll only repay when your income is over £25,375 a year (before tax and other deductions).
If you’re on a Postgraduate Loan repayment plan you’ll only repay when your income is over £21,000 a year (before tax and other deductions).
There’s no penalty for paying some or all of your loan off early.
Student loans are written off either when you’re 65, 25 to 30 years after you graduate or when a person dies.
4. How much do I pay back?
You pay back 9% of the amount you earn over the threshold for plans 1, 2 and 4 or 6% of the amount you earn over the threshold for the Postgraduate Loan.
You do not pay anything back if your income is under the threshold.
Interest starts being added to your loan from when you get your first payment. Interest is currently only 1.5%.
5. How do I find out my balance?
This is actually really easy now. Here’s the link to sign in to your account… https://www.manage-student-loan-balance.service.gov.uk/ors
If you can’t remember your Customer reference number or password, they can find you with just your name, date of birth and mobile number.
Student loan queries have been my most FAQs in the last couple of months hence the need for this article. I hope this has been useful for practical reasons but also that people read and appreciate my honesty and openness about my personal circumstances, and that it resonates with others of you who still have student loan “debt”.