Student Loans Confusion

When did you start and graduate university? It sounds like you're on plan 1 (started before 2012)? If so, your interest rate will be 3.1%. That's around £713 a year. On a salary of 32k you'll be paying a bit over £1280 a year for 2017, and I'm not sure how this stands for previous years - may be less. So yes, given the interest rates a reduction in your loan of only around £1000 over 2 years is not unusual (although depressing) as most of what you're paying is actually interest!

Remember that if you graduated in 2015 you also wouldn't automatically pay your SL until the following April.

I had the same confusion. The way the student loan repayments work seems a bit odd.

Money is deducted from your salary and held by HMRC until the end of the tax year. At that point, it is paid to the student loans company and the balance comes off the loan.

However, if you change jobs (oddly enough, I am in identical circumstances - same dates and salary increase, and similar outstanding balance!), it takes awhile for the second job's contributions to get deducted from the balance. I rang a few weeks ago, and the second jobs' balance still hadn't been deducted, but they said to check back at the end of September....!

Worse still, if you pay your student loan off mid way through a tax year, your employer will continue to take deductions from your salary - only at the end of the tax year will you get any monies owed come back to you.

They should have explained this to you over the phone - worth double-checking, but I suspect this is what has happened, and a further deduction off the balance is due.

I once walked past a colleague photocopying a vast amount of docs and said something like 'blimey there will be no forests left when you've finished.' Turns out he had paid his student loan off many months ago, but due to the archaic HMRC/SLC system they had continued taking payments for a substantial amount of time after his balance had reached zero. He then had to photocopy and send off a load of his previous payslips as proof of payment so he could claim the money back off SLC.


To avoid this situation, make sure you keep your address updated so you get the yearly update. Then when you get down to £5k or so left, start to pay a bit more attention to your estimated SLC debt-free date.


Once you get to within a year of paying it off, start the process of switching to a direct debit payment rather than through salary sacrifice. This gives control to you and will ensure they don't continue to take money for months after you have paid it back.