Student loan repayment horror!

RFe_2

Hi all,

I called the SLC the last week to see what my balance was now that I have been paying it off diligently (without choice as it comes out of my pay every month!) for 17 months now. I was surprised to hear that the balance was £200 more than it was last year... I was horrified to hear that even though I am paying it off every month through my employer they don't transfer that money over to pay off my loan until the end of the tax year. Is that normal? It just seems so wrong to me. I could be making interest on that money elsewhere and transferring it myself at the end of the tax year. Does anyone know if that is an option?

One final question that I am really concerned about - given that my employer should have transferred this over at end of tax year, why is it now August and still now repayment?

Any help would be gratefully received!

Thank you

FattyBettyBoo

I think you'd probably be best phoning the SLC and asking them. I'm repaying now and don't earn enough to cover the interest with my payments. I've asked a few questions on here but you'll only really find the answer by calling them - its a mine field!

BaconandEggs

Please post if you manage to get any answer from them

MrsManda

Your student loan repayments along with your income tax and national insurance are taken from your salary each month. At the end of the financial year the HMRC tell the SLC how much you have made in repayments. This is split across the year and applied to your account then interest is recalculated.

For example:
If you repay £1200 over the year the SLC treats it as if you repaid £100 each month and calculates the interest accordingly.
(at least that's how I've always understood it)

It just seems so wrong to me. I could be making interest on that money elsewhere and transferring it myself at the end of the tax year. Does anyone know if that is an option?

This isn't an option. If you pay tax via PAYE then this is how you will repay your student loan. You can switch to paying by Direct Debit but only when it is calculated that your loans will be repaid within 2 years.

http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,3867326&_dad=portal&_schema=PORTAL

Oldernotwiser

Also, have you allowed for the interest that your loan is accruing?

Poolie

Mrs Manda is right that the total repayments are divided by 12 and split across the whole tax year.

The repayments are only received to SLC when the following has happened:
a) After the end of the tax year and before end of June, your employer submits the P14 annual return to HMRC. This tells HMRC exactly what everybody employed during tax year has earnt as well as paid in Income Tax, NI and Student Loans along with any benefits received.
b) HMRC perform checks on the data received and split off the SLC portion and send this to SLC on a weekly basis.
c) SLC receive the file and apply it to the accounts when they have the correct cycle in the system - usually weekly.

You are not discriminated against for this time as SLC apply the repayments over the whole tax year and then readjust the interest.

The extra £200 sounds like the interest for the tax year being applied to your account.

Best to wait for your statement to check the amount SLC say they have received and you will see the interest that has been charged (at 1.5%) to your account