Student loan and pension lump sum

MiniJOJO

Hi, I am considering doing a Masters degree it will take 4 years, I will be 54 when it ends. I wanted to Flexi retire at 60 and get a lump sum. Will I have to pay back my post-grad loan out of the lump sum? does it count as income for that year. I am more than happy to pay it back but not all at once out of my lump sum preferably.

Spreadsheet_Addict

MiniJOJO said:

Hi, I am considering doing a Masters degree it will take 4 years, I will be 54 when it ends. I wanted to Flexi retire at 60 and get a lump sum. Will I have to pay back my post-grad loan out of the lump sum? does it count as income for that year. I am more than happy to pay it back but not all at once out of my lump sum preferably.

Hi - with a student loan, you pay back 9% of income above the first (forget the latest figure but its about £27.5k) in any one year.

I am not sure if your lump sum counts as income (someone else would have to advise,) but if it did, you'd pay 9% of everything you earned over that £27k+ figure (income from work, pension, and if it counts, plus the lump sum) back to the loans company in the year you'd earned it.

I think there's a ceiling to the amount they apply the 9% to, but can't remember what it is.

If you're not going to earn + draw pension more than the £27+k in a normal year, the good news is you'll never pay it back in those years and it'll be written off after 30 years. 

I advise you check with the Student Loans Company and find out whether they class pension lump sums as income and what the upper and lower income limits are for the 9% repayments. You should then be able to work out how much (or even whether) you have to pay back.

MiniJOJO

I think it is 6% for Masters, not 9% which applies to Bachelors degrees. My basic pay is £38000 but with overtime, it is usually about £46000, would have to not do overtime while studying though.

Dazed_and_C0nfused

You don't say if this will be a TFLS or taxable payment but either way it looks like it won't be included unless you need to complete a Self Assessment tax return.

Which could be possible if the taxable pension income is large enough.

https://www.whatdotheyknow.com/request/pension_income_included_in_incom

MiniJOJO

It is a TFLS from an NHS pension

msallen

As far as I am aware post grad student loans are only for full time study, but if you envisage a masters taking 4 years then I'm guessing its part time.

MiniJOJO

part-time up to 4 years can apply for a student loan, it must be a full masters, not a top up.