Student loan cleared in bonus?

callipygian

My husband works in an industry where bonuses tend to be a large % of your salary. In 2-3 weeks he will get paid his bonus, a couple of days after finding out what it will be. He's not particularly aware/savvy in this area (student loans) but i've sat down and done the maths and unless his bonus is awful he will almost certainly pay it off (and some) in this bonus cheque.

This will be a bit of a shock to SLC as on his base salary he wouldn't pay it off until the end of next financial year 2017-2018. I've looked at maybe switching to direct debits but it says that you have to be due to finish paying off your loan between 4 and 23 months time. Has anyone done this before? Is this because it takes 4 months for them to get their act together and stop making payments? If so that will be after the financial year, I don't want us to be overpaying for another year!

We have two small children, and when I go back to work after mat leave in a few months my entire salary will be tax, my student loan, their childcare and my transport to and from work. The extra money would be really good for us.

So my question is, should he ring up SLC and try and switch to DD before his bonus is paid, or would this be worse because they will probably still take the money out of the bonus cheque and then we will be stuck paying extra for 2 years? Or is it a fairly instant process.

Or, would it be best to just pay it off and some in the bonus cheque and then the remaining pay cheques for the tax year, knowing that at least it will end this tax year.

If it makes any difference his loan is a 2006 one (graduated 2010).

CLAPTON

callipygian wrote: »

My husband works in an industry where bonuses tend to be a large % of your salary. In 2-3 weeks he will get paid his bonus, a couple of days after finding out what it will be. He's not particularly aware/savvy in this area (student loans) but i've sat down and done the maths and unless his bonus is awful he will almost certainly pay it off (and some) in this bonus cheque.

This will be a bit of a shock to SLC as on his base salary he wouldn't pay it off until the end of next financial year 2017-2018. I've looked at maybe switching to direct debits but it says that you have to be due to finish paying off your loan between 4 and 23 months time. Has anyone done this before? Is this because it takes 4 months for them to get their act together and stop making payments? If so that will be after the financial year, I don't want us to be overpaying for another year!

We have two small children, and when I go back to work after mat leave in a few months my entire salary will be tax, my student loan, their childcare and my transport to and from work. The extra money would be really good for us.

So my question is, should he ring up SLC and try and switch to DD before his bonus is paid, or would this be worse because they will probably still take the money out of the bonus cheque and then we will be stuck paying extra for 2 years? Or is it a fairly instant process.

Or, would it be best to just pay it off and some in the bonus cheque and then the remaining pay cheques for the tax year, knowing that at least it will end this tax year.

If it makes any difference his loan is a 2006 one (graduated 2010).

HMRC tell the SLC his yearly contributions once a year around mid summer for ther last tax year

Lokolo

I think it might be a bit too late now. It took 3 months for my DD to transfer, 1 month to take off pay, 1 month to set up DD and then the next month my first DD was taken.

If he rings them up now they can send the stop notice to HMRC who will then send it to his employer. But it might be too late for that. Definitely ring them to get them to do that though. They may require to know what payments he has made this year though so have payslips from April onwards where the payments show, they can update their system from these.

The other option - pay it off now, is quite a good one but unless the stop notice is given before the bonus, money will still come out and he will have essentially double paid. He would get a refund but it may take a while.

Ring them ASAP and get that stop notice in.

callipygian

Thanks Lokolo, that's kind of what I suspected. Reading around online they seem to be AWFUL for getting things processed.

Really annoyingly my husband gets paid every two weeks so he has a tonne of payslips. Hopefully we can dig them all out and were not missing 1!

callipygian

Argh - he just called and they are closed for the "Festive period". It's not even a bank holiday today! Unless they are based in Scotland? Possible I suppose.

callipygian

I know people often stumble across questions via a search engine so i thought i should update.

He called SLC and they asked him to read out all of his student loan payments on all his payslips so far. This got them up to date on his current balance.

Then, when the bonus payslip came he told them the figure and each Wednesday they send a stop notice to HMRC to stop taking payments. This actually happened before the next payslip (which is every 2 weeks so not slow!) In other words, the payments dont keep going on forever and forever and you dont actually need to provide any concrete proof to stop the payments.

After he was sure that the student loan payments had stopped, he had to photocopy all of his payslips for the year and post the copies to SLC, once they have processed them they will pay the refund in a cheque, this has not happened yet but it takes quite a few weeks, up to 6 i think.

Lokolo

Good to hear that it's currently working out!