Student Loan liability & pension contributions

hatnezmaturestudent

Hi, I have two queries that I would appreciate advice on.

In October 2014, I started studying part-time degree using SFE loan. As long as I remained on the course I was not liable for repayments until April 2019. This October, I started the third year of the degree (out of six) with SFE loan but after three weeks had to defer the course for a year due to personal circumstances. I will resume study next year. I earn above the threshold. I also contribute 15% of my gross income towards a pension.

My queries are; Does deferral count as leaving the course (despite intending to resume next year) which means I am liable for repayment from April 2017? And if so, is the 9% over the threshold calculated before or after my pension contributions?

Many thanks

Ed-1

hatnezmaturestudent wrote: »

Hi, I have two queries that I would appreciate advice on.

In October 2014, I started studying part-time degree using SFE loan. As long as I remained on the course I was not liable for repayments until April 2019. This October, I started the third year of the degree (out of six) with SFE loan but after three weeks had to defer the course for a year due to personal circumstances. I will resume study next year. I earn above the threshold. I also contribute 15% of my gross income towards a pension.

My queries are; Does deferral count as leaving the course (despite intending to resume next year) which means I am liable for repayment from April 2017? And if so, is the 9% over the threshold calculated before or after my pension contributions?

Many thanks

No, ordinarily you'd be classed as 'suspending' your studies and your repayment due date would remain at April 2019.

The relevant regulation is here: http://www.legislation.gov.uk/uksi/2012/1309/regulation/5/made

(2A) Subject to paragraph (2C), where a borrower takes out a post-2012 student loan in relation to a part-time course, the borrower is not required to repay any part of that post-2012 student loan until the earlier of—

(a) the start of the following tax year commencing on 6 April after the borrower ceases to be eligible for financial support under Regulations made pursuant to section 22 of the 1998 Act whether by reason of having completed that course or otherwise; or
(b) the start of the following tax year commencing on 6 April after the fourth anniversary of the course start date.

(a) doesn't apply to you as you haven't ceased to be eligible for financial support as you haven't withdrawn from the course, you've only suspended.

As for pension contributions, student loan repayments are based on gross income. So if you contribute to a pension from net income (i.e. income that has already been taxed and then receive tax relief into the pension), the pension contributions would count as income for student loan repayment purposes. However, if you contribute to a pension through a salary sacrifice scheme (i.e. from gross income before it has been taxed) then it doesn't count as taxable income so doesn't count as income for student loan repayment purposes.