Student Loans Pre-1998

CLarner

Hi all,
I've just found out that the pre-1998 student loan threshold for 2020/2021 has DECREASED by around £2000.

I took my last loan out in 1997 and my loan is almost at the point of being written off. As far as I recall for the past 23 years the threshold has always risen not decreased so does anyone know why this year is different?

This decrease now means I am slightly above the threshold and I will have to start paying my loan back. I know that I am in a more fortunate position than some but my husband has just been made redundant due to this pandemic and an extra £143 going out per month is really going to hit us.

I'd just like to know the reasoning behind this decision as it seems that many will be hit by this at a time of vulnerability and uncertainty which seems a deliberate act?

Many thanks.

[Deleted User]

CLarner said:

Hi all,
I've just found out that the pre-1998 student loan threshold for 2020/2021 has DECREASED by around £2000.

I took my last loan out in 1997 and my loan is almost at the point of being written off. As far as I recall for the past 23 years the threshold has always risen not decreased so does anyone know why this year is different?

This decrease now means I am slightly above the threshold and I will have to start paying my loan back. I know that I am in a more fortunate position than some but my husband has just been made redundant due to this pandemic and an extra £143 going out per month is really going to hit us.

I'd just like to know the reasoning behind this decision as it seems that many will be hit by this at a time of vulnerability and uncertainty which seems a deliberate act?

Many thanks.

The deferment threshold is defined in the Education (Student Loan) Regulations 1998 as 85% of the lender's estimate of the average earnings of all full-time employees in Great Britain for the January when the level will apply. The threshold is calculated annually by DfE, using data published by the Office for National Statistics.  People's income has fallen so it follows that the threshold falls too.

nick74

The threshold has decreased at least twice in the past. It's explained on this page from 2014:

https://www.moneysavingexpert.com/news/2014/08/student-loan-deferment-threshold-to-fall-qa-on-why-its-happening

CLarner

Thanks so much for your help so far - it's really useful information.

Could anyone advise what will happen when I start paying this loan back - i.e. if it will negate the write off of the loan after 25 years? Or will the loan be written off at this 25 year anniversary regardless of if I have paid some of the loan back?

Having never earned anywhere near enough to meet the threshold previously I honestly don't know how paying some of the loan back affects terms so would be really grateful if someone could clarify for me?

Many thanks in advance. 

[Deleted User]

CLarner said:

Thanks so much for your help so far - it's really useful information.

Could anyone advise what will happen when I start paying this loan back - i.e. if it will negate the write off of the loan after 25 years? Or will the loan be written off at this 25 year anniversary regardless of if I have paid some of the loan back?

Having never earned anywhere near enough to meet the threshold previously I honestly don't know how paying some of the loan back affects terms so would be really grateful if someone could clarify for me?

Many thanks in advance. 

The circumstances in which the lender will cancel the borrower's liability to repay the loan(s) is also covered in the Education (Student Loans) Regulations 1998. You finally starting to repay your student loans now won't make any difference to your liability eventually being written off in 2022.

CLarner

Thank you so much for your help. I'm not usually financially inept but having never been above the threshold and the loan being so old I had no idea of how the terms worked.

Your help is very much appreciated.

jimbo6977

If you are now due to make repayments and you fail to do so, the loan will cease be eligible for write-off, so make sure you make the due repayments.