Student loan repayment

giddypenguin

Not sure if this is the right place, sorry if not.

A friend told me that he's never had a repayment taken for his student loan - he earns over the £15k threshold (was in the £3k a year cohort) but in the 3/4 years since graduating no deductions have been made.

My immediate response was "surely you should let SLC/HMRC/payroll (or just someone) so it can be fixed - the last thing you want is them backdating the repayments due and being asked for a lump sum" to which he replied "I doubt they can do that"

They've made up their mind that they are quite happy with the way things are, but I was just curious - as I imagine over the next 20 odd years someone will realise... What will happen then? Couldn't find the information on google. (Yes I'm being a nosey Parker!)

Ed-1

giddypenguin wrote: »

Not sure if this is the right place, sorry if not.

A friend told me that he's never had a repayment taken for his student loan - he earns over the £15k threshold (was in the £3k a year cohort) but in the 3/4 years since graduating no deductions have been made.

My immediate response was "surely you should let SLC/HMRC/payroll (or just someone) so it can be fixed - the last thing you want is them backdating the repayments due and being asked for a lump sum" to which he replied "I doubt they can do that"

They've made up their mind that they are quite happy with the way things are, but I was just curious - as I imagine over the next 20 odd years someone will realise... What will happen then? Couldn't find the information on google. (Yes I'm being a nosey Parker!)

The repayment threshold for those students who started before 2012 is not £15000 (it was until 2011) - it's currently £17335. It goes up every year by inflation. So that could be the reason. As soon as SLC and HMRC match a student's loan details (i.e. that they have a loan eligible for repayment subject to earnings) with an employment record HMRC sends a start notice to the employer. So the employer should automatically start deducting repayments if earnings exceed the repayment threshold. When you start a new employment as a new starter, you should indicate on the starter form that you are eligible to repay a student loan or show the new employer a P45 with a Y in the relevant box.

There is nothing in the regulations that permits backdating of repayments.

giddypenguin

Thanks for that answer, I would be extremely shocked to hear he wasn't earning at least £17335 - but maybe that is the case. But I guess if he has slipped through the net he may get away with it!

somethingcorporate

What is there "to get away with"? he will still owe the SLC.

Ed-1

somethingcorporate wrote: »

What is there "to get away with"? he will still owe the SLC.

Quite a lot really as the loan gets wiped after 25 years. Income contingent loan = tax. You repay 9% of your earnings over and above the repayment threshold up to the sooner of clearing the balance or 25 years. It's akin to not paying taxes.