How is pension income treated when repaying a student loan.

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I'm considering a part time OU degree, and thinking of applying for a student loan to cover tuition fees.
I shall be in receipt of pension income (not earnings) when repayment of the Student Loan starts.   
My understanding is:
1) The student loan repayment will start 4 years after I first enrol on the course;
2) Repayments will be calculated at 9% on taxable income over £27,295;
3) Pension income and taxable interest and investment income are taken into account in full as income;
4) Cash ISA's and other non-taxable interest / investment income are not included in the income calculation.  

Can anyone confirm this, and / or provide a link that explains how pension and investment income are treated when repaying the loan.
I cannot find this information in the online SL information / documentation.

TIA.


Alice Holt Forest situated some 4 miles south of Farnham forms the most northerly gateway to the South Downs National Park.

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  • Ed-1
    Ed-1 Posts: 3,909 Forumite
    First Anniversary Name Dropper First Post
    edited 22 June 2021 at 12:31AM
    Options
    I'm considering a part time OU degree, and thinking of applying for a student loan to cover tuition fees.
    I shall be in receipt of pension income (not earnings) when repayment of the Student Loan starts.   
    My understanding is:
    1) The student loan repayment will start 4 years after I first enrol on the course;
    2) Repayments will be calculated at 9% on taxable income over £27,295;
    3) Pension income and taxable interest and investment income are taken into account in full as income;
    4) Cash ISA's and other non-taxable interest / investment income are not included in the income calculation.  

    Can anyone confirm this, and / or provide a link that explains how pension and investment income are treated when repaying the loan.
    I cannot find this information in the online SL information / documentation.

    TIA.


    Your earnings for student loan purposes are calculated in the same way as they are for National Insurance contributions (NIC).

    Pensions that you receive are not counted as earned income but as unearned income so may affect the amount you are required to pay back on your student loan if you complete a tax return.

    https://www.litrg.org.uk/tax-guides/students/student-loans/plan-2-student-loans/i-am-employee-how-do-i-make-plan-2-student

    In a nutshell, only income that is subject to National Insurance is relevant for student loan repayments. Unearned income is only counted if you are in self assessment and only then if it is over £2000.
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