MSE News: Student loan deferment threshold to fall: Q&A on why it's happening

basictonal

hi there

i too will now be earning more than the threshold of £26,727 when they send out deferment forms in the next month or so - but only just about @ £27000.

i read above there is a way to avoid paying it if you increase your pension contributions, is that correct?

how does it work???

what about do the loans people take into consideration when calculating if you are above or below the threshold?

thanks!
david

quebe

i've literally only just found out about this today, i wondered why the threshold seemed lower.

I have been deferring repayment since 1999 as I have never earned a salary that was over the threshold. In each of the previous years since then, the threshold has gone up slightly so I never thought I was in danger of reaching it anytime soon (especially with no pay rises due in the near future at least). Now that it has gone down quite substantially for 2015/16 I have hit the threshold – I’m over by £5 per month. So from April this year, I will have to find £150 per month, which is the amount my repayments have been fixed at, which I have not budgeted for. I don’t see how I will be able to afford it..,. Is this something I can challenge?

CSM23

I've only just realised about the drop in the repayment threshold. I have also been caught out. I have been able to defer since 1998 due to low paid jobs or part time working as I now do but will now have to start repaying!
Being a single parent with a mortgage and child care costs I really don't know how I am going to find the money to repay this. My main source of income is actually child maintenance payments through the CSA. I also receive tax credits and a low income. To qualify for tax credits the maintenance payment is not taken into account and any childcare costs are offset. Yet for the student loan repayment this is not the case!
Really worried about getting into debt over this. Any advice would be greatly received!

Ritch_B_2

I too was blissfully unaware of the repayment threshold drop and if it wasn't for the 1% salary increase I've just had, which is the first in five years, I'd still be under the threshold. As it stands, I'll now be over £100 a month worse off, which is a bit of a kick in the teeth.

And yes, I knew I'd most likely have to pay the loans back eventually, but I, along with everyone else, it would seem, didn't expect the threshold to be reduced at this time, especially since despite my (amazingly high) salary increase, I'm still significantly worse off that I was twelve months ago. I'll now be super-significantly worse off!

basictonal

hi all

so i have accepted paying my loan back from the end of this month as i now earn over the threshold.

BUT I have read that the threshold will increase to more than £27000 when it is next announced - is there any truth in this?

I think the next threshold change (if it happens) occurs in september of each year????

when is it usually announced???

thanks
david

Clive_Woody

Ritch_B wrote: »

I'm still significantly worse off that I was twelve months ago. I'll now be super-significantly worse off!

But on a positive note you will paying off your debts so technically you are not worse off as the money is being used to clear what you owed already.

Ed-1

basictonal wrote: »

hi all

so i have accepted paying my loan back from the end of this month as i now earn over the threshold.

BUT I have read that the threshold will increase to more than £27000 when it is next announced - is there any truth in this?

I think the next threshold change (if it happens) occurs in september of each year????

when is it usually announced???

thanks
david

The deferment threshold for 2015/16 will be calculated by BIS in July time and announced at the start of August. It will almost certainly go up to around £27000+ as this year's threshold was an anomaly due to tax changes in April 2013 which skewed average earnings (which the threshold is based on) to the downside. The year before the threshold was skewed to the upside for the same reason so it evens out.

Ed-1

Clive_Woody wrote: »

But on a positive note you will paying off your debts so technically you are not worse off as the money is being used to clear what you owed already.

But remember these "debts" get written off if you can defer for long enough so it's not a case of "you'd have to pay them off sooner or later".

LynnParker

CLAPTON wrote: »

why does it stink


the T&Cs are as agreed when the loans were taken out and everyone concerned has had over 16 years to plan for this day.


anyone with these pre 1998 loans has had a better deal that subsequent students

It stinks bacause the T&Cs have changed. It stinks because the amount is a flat payment per month regardless of how much you earn over the threshold. It stinks because my outgoings have risen, my income hasn't, but the threshold has dropped by more than £2000 in the past year. At least the contingent-based repayments take how much you earn into account - I would have preferred this option and I would have probably have paid my loan back by now rather than having spent the last few years worrying that something like this would happen.

You may not agree, but your 'I'm alright Jack' attitude will not stop it stinking.

Ed-1

LynnParker wrote: »

It stinks bacause the T&Cs have changed. It stinks because the amount is a flat payment per month regardless of how much you earn over the threshold. It stinks because my outgoings have risen, my income hasn't, but the threshold has dropped by more than £2000 in the past year. At least the contingent-based repayments take how much you earn into account - I would have preferred this option and I would have probably have paid my loan back by now rather than having spent the last few years worrying that something like this would happen.

You may not agree, but your 'I'm alright Jack' attitude will not stop it stinking.

No they haven't. The terms and conditions are the Education (Student Loans) Regulations 1998 and haven't been changed (amended) since 1998. It states the deferment threshold is an amount equal to 85% of average earnings. That is what the threshold is this year and is every year. Average earnings change, so the threshold also changes. That's not changing terms and conditions of repayment.