Repaying the student loan

You will not normally have to make any repayments while you are studying. You start repaying the student loan after you leave your course, get a job and are earning over 16,910 a year (in other words, the repayment is income-contingent).

Most students will repay their loans through HM Revenue and Customs either by employers taking amounts from pay through the PAYE system or through the tax self-assessment process. How quickly you repay your loan will generally depend on how much you earn. You can also make voluntary payments, at any time, direct to the Student Loans Company (SLC).

The SLC have a website dedicated to the repayment of student loans and they have also produced very useful repayment calculator.

When do I start repaying the loan?

You will normally start making repayments from 6 April of the year following the date you leave your course. The Student Loans Company Limited (SLC) will write to you before you start making payments to tell you how they will collect.

What will I repay?

There will be an income level (a threshold) below which you will not have to make any repayments at all. The current threshold is 16,910 each year before deductions. The SLC will expect you to repay 9% of your annual income over 16,910. A different limit may apply if you move to live in a country outside the UK.

What rate of interest will I repay?

Student loans are not commercial loans. The government subsidises the actual cost of interest on the loans, so they do not attract the same rates of interest as a loan from a bank or building society. Interest on the amount you owe will be linked to inflation - in line with the retail price index (RPI) - so the value of the amount you pay back will be about the same in real terms as the value of the amount you borrowed. This will apply as long as the loan lasts and will include any time when you are not studying or not repaying the loan, as well as when you are repaying the loan. Further information is available on the SLC website.

Cancellation

If you took out your loan before 1 August 2007 and have kept up your repayments, the SLC will usually cancel any loan plus any interest:

  • When you reach 65;
  • if you die before you pay the loan off;
  • or if you become permanently disabled and unfit for work.

If you take out a loan for the first time after 1 August 2007 and have kept up your repayments, the SLC will usually cancel any loan plus any interest:

  • 35 years after the April that you first became liable to repay your loan (rather than when you reach 65);
  • if you die before you pay the loan off;
  • or if you become permanently disabled and unfit for work.

If you would like to know more about the circumstances in which loans can be cancelled, please contact the SLC on 0845 026 2019.

How do I repay my loan?

The Student Loans Company (SLC) will work with HM Revenue and Customs to collect repayments. Repayments are not over a fixed period, but the level of repayments will rise and fall in line with your income.

If you are an employee, your employer will take repayments from your pay, at the same time as they take tax and National Insurance contributions. Your employer will work out your payments based on your individual pay periods and not on your total income for a whole year. The repayments will be shown on your wage slip.

If you are self-employed, HM Revenue and Customs will collect your loan repayments through the self-assessment system, along with your tax. Your liability will be assessed on all your appropriate PAYE income plus any extra self-employed income.

If you live outside the UK or are working abroad for a non-UK employer, you will have to tell SLC about this and you will have to make monthly payments direct to SLC. SLC will make alternative arrangements to collect repayments direct from borrowers who are outside the UK tax system.

If you have a problem

If you have any questions about your eligibility, please contact us.

The SLC handle the loan scheme on behalf of the Scottish Ministers. They are responsible for keeping details of your account, adding interest, sending you statements and answering questions about your loan. If you have any questions about your individual loan account, please write to SLC, 100 Bothwell Street, Glasgow, G2 7JD or phone 0845 026 2019.

What happens if I don't make repayments?

By law, you have to repay your loan. If you fail to make repayments that are due, the SLC has the right to accelerate your debt. This means that they can get a court order to make you repay the total loan in a single payment. This can be enforced in the courts as a civil debt whether you are in the UK or living abroad.

What to do if you are not satisfied

You should read the Student loans: A guide to terms and conditions booklet. This will tell you what to do if you are not satisfied about the way your repayments are being collected, or you want to appeal against a decision about your account, for example, the amount you have been asked to repay each month, is not correct.

The Graduate Endowment

On the 28 February 2008 the Scottish Parliament approved the Graduate Endowment Abolition (Scotland) Bill. More information is available in this news release

This new legislation will mean that all students who graduated or were entitled to graduate after 1 April 2007, and those in subsequent years will not have to pay the Graduate Endowment.

If you graduated prior to April 2007, you may still be required to repay the Graduate Endowment. If you have any further queries surrounding the payment of the Graduate Endowment please contact us for advice.