Student Loans Company (SLC) Plan1 overseas earnings thresholds unfair
LaurenceFrancisKelly
Forumite 11 Posts
Hi guys, has anyone else found the SLC Plan1 overseas earnings thresholds to be unfair? My son has found this to be the case ever since he moved from UK (Northern Ireland) to the Republic of Ireland in 2020. The UK and Ireland both have the same threshold of £20,195 even though the cost of living in Ireland is much higher and it is a more expensive country to live in.
https://www.gmsmove.com/living-in-ireland-vs-the-uk/?fbclid=IwAR3_u1p97CLQH4bPPVv4GuA_yJ_52y8XRw374oDrEau5R9xpPdlT8d1Pznw#:~:text=A study from 2018 by,costing more in Ireland too
My son had a Grade 6 public service job in Northern Ireland that was equivalent to only a Grade 4 public service salary in Ireland so he has ended up paying the same repayment amount despite having to drop two pay grades. Although his salary was matched when he moved from NI to ROI, he was in fact worse off as his SLC repayments jumped from £58 per month to £77 per month. He has since got promoted to a grade 5 job and is now paying £140 per month for a grade 5 job whilst in Northern Ireland he was paying only £58 per month for a grade 6 job. So he is paying more than double for a grade 5 role in Ireland compared to what he was paying whilst in a higher grade 6 role in the UK.
When he queried this with SLC, this was their response:
"The Plan1 thresholds are the same for the UK and Ireland, £19,895 now £20,195 from April 2022. If a customer's annual Overseas Assessment begins prior to their March repayment due date, the current tax year's Exchange Rate for their country will be used until they are re-assessed. If an assessment begins after a customer's March repayment due date, the coming tax year's Exchange Rate will be used. The exchange rates and thresholds are not set by SLC, so we will not be able to review this. The SLC uses the World Bank Price Level Index or PLI to group countries into 6 groups A-G. The Price Level Index (PLI) determines the threshold Banding for each country. The PLI is based on economic factors (e.g. the cost of living - food, housing, transportation etc) relative to the UK. Ireland is in Band E along with the UK, Canada, Sweden and Hong Kong."
So it sounds like there is very little that can be done to change this, has anyone else had a sense of injustice with SLC after moving overseas?
Is there some kind of calculator where he could figure out if he is now better off trying to repay the loan early/in-full?
He graduated in 2012 having taken a total loan of £18,419 and as of today he has so far repaid £4,479.
His SLC balance is currently £16,899.42 with the loan not due to be written off until April 2038.
https://www.gmsmove.com/living-in-ireland-vs-the-uk/?fbclid=IwAR3_u1p97CLQH4bPPVv4GuA_yJ_52y8XRw374oDrEau5R9xpPdlT8d1Pznw#:~:text=A study from 2018 by,costing more in Ireland too
My son had a Grade 6 public service job in Northern Ireland that was equivalent to only a Grade 4 public service salary in Ireland so he has ended up paying the same repayment amount despite having to drop two pay grades. Although his salary was matched when he moved from NI to ROI, he was in fact worse off as his SLC repayments jumped from £58 per month to £77 per month. He has since got promoted to a grade 5 job and is now paying £140 per month for a grade 5 job whilst in Northern Ireland he was paying only £58 per month for a grade 6 job. So he is paying more than double for a grade 5 role in Ireland compared to what he was paying whilst in a higher grade 6 role in the UK.
When he queried this with SLC, this was their response:
"The Plan1 thresholds are the same for the UK and Ireland, £19,895 now £20,195 from April 2022. If a customer's annual Overseas Assessment begins prior to their March repayment due date, the current tax year's Exchange Rate for their country will be used until they are re-assessed. If an assessment begins after a customer's March repayment due date, the coming tax year's Exchange Rate will be used. The exchange rates and thresholds are not set by SLC, so we will not be able to review this. The SLC uses the World Bank Price Level Index or PLI to group countries into 6 groups A-G. The Price Level Index (PLI) determines the threshold Banding for each country. The PLI is based on economic factors (e.g. the cost of living - food, housing, transportation etc) relative to the UK. Ireland is in Band E along with the UK, Canada, Sweden and Hong Kong."
So it sounds like there is very little that can be done to change this, has anyone else had a sense of injustice with SLC after moving overseas?
Is there some kind of calculator where he could figure out if he is now better off trying to repay the loan early/in-full?
He graduated in 2012 having taken a total loan of £18,419 and as of today he has so far repaid £4,479.
His SLC balance is currently £16,899.42 with the loan not due to be written off until April 2038.
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HK is one of the most expensive countries to live in, according to various tables indexing the cost of living. I compared the World Bank Data PLI table (used by the SLC) to others available on the internet and the difference in country ranking was significant. It seems to me that the WBD does not take rental costs into account which distorts the true costs involved in living in some overseas countries which leads to incorrect and unfair repayment thresholds.
The SLC suggested I address my concerns to Westminster...
With regard to paying off the loan, there are some calculators online that enable you to enter the overseas repayment threshold and determine (with reasonable forward salary assumptions) the real cost or benefit of paying the loan off in full or not. For smaller loans, especially under 30,000, one should not assume that the initial capital loan will not be repaid within the 30 year repayment term. This means that over the 30 year period, the total repaid could, in real terms, be greater than the sum currently outstanding.
You repay the advance plus interest.
https://www.gov.uk/government/publications/overseas-earnings-thresholds-for-plan-1-student-loans
Overseas earnings thresholds for student loan repayment are based on:
the annual UK earnings threshold during the period
World Bank data, which measures the differences in general price levels between countries
the exchange rates, calculated as an average rate for the previous UK calendar year.