Student loan overseas thresholds

confusingstudentfin

Hi,

I am rather confused by apparent changes to the thresholds for repayment for Overseas Repayment Schedule for individuals on Plan 2.

I was contacted by the Student Loans Company (SLC) saying there would be changes (increase) to my repayments, this was confusing given that my income had not changed and based on the announcements I had seen from the government I was expecting the thresholds for repayment to be frozen.

The SLC Overseas earnings thresholds for Plan 2 student loans page still only shows the thresholds for 2025-2026. I contacted SLC and was informed that the threshold for 2026-2027 has in changed compared to 2025-2026, specifically the threshold has decrease by nearly £5000 (I assume this is only for Germany, that it will be different for each country and that it does not apply to the UK).
When I asked SLC why this was I just got a response say it was changed by the government and directing me to the gov.uk website.

Asides from being mildly frustrating, it has left me no closer to understanding where I could have found information to anticipate these changes other than waiting for SLC to contact me and I am just as confused as before as this decrease in threshold seems to contradict all the announcements I saw about the thresholds being frozen.

I generally view the student loan repayment as a graduate tax and have no issues with making repayments provide I understand what is going on. The only way I could explain this is that the government has decided the cost of living in Germany has somehow decrease by nearly £5000 between 2025-2026 and 2026-2027 but that seems a little absurd.

If anyone has the time and knowledge to help me understand what is going on I would very much appreciate it.

Thanks

Woodstok2000

I would query this with the SLC again and ask for written confirmation of exactly what they are applying and why they are deviating from their own published procedures - the overseas thresholds and exchange rates are calculated annually and published each April (to be effective from that month), so they shouldn't be making changes now as far as I understand it.

confusingstudentfin

That is what I had understood as well. The reason I contacted them in the first place was because I recieved a letter from SLC saying my Overseas Repayment Schedule has changed and that it is because "the threshold we use to calculate your monthly repayment changes in line with the UK Retail Price Index (RPI) and Price Level Index (PLI)." - which again seems to contradict the annoucements I saw about the thresholds being frozen.

I have it in writing as I contacted them through the online chat function they have and downloaded the transcript. Two different employees at SLC said that the thresholds will change from £28470.00 (2025-2026) to £23510.00 (2026-2027) starting April 2026 - which is why the 26/27 thresholds are not up to date on their website.

Woodstok2000

I don't think there's much you could have done - the figures are recalculated annually and so it sounds like they've given you as much notice as they can (although 8 weeks is not great for a change of this size).

In terms of the thresholds being frozen, that's only from 2027 and the annual recalculation for overseas repayments will still happen so that people aren't impacted (positively or negatively) by changes in costs of living or exchange rates.

It might be worth contacting them to see if they can give you the details of the calculation and some historical data for reference - the change does seem significant but there are two variables (UK RPI and PLI) so if they've both moved in opposite directions it could have resulted in a significant swing.

grtyuk

Hello, I came here to ask exactly the same question. Living in Belgium, was quoted the exact same thresholds and changes. It seems crazy for me for the threshold to be decreasing and by so much. Not happened before in the 6 years I've been here.

I got the same response from online chat, no information! My monthly repayments will nearly double. It surely can't be a question of cost of living changes, its not like things here aren't also going up. My first thought was either that it is a mistake or it is an as-yet unannounced policy change.

Foay97

I've recieved the exact same notifcation of an increase to my student repayments. I'm also in germany and I've been told its because the price level index from the world bank has been updated and now germany is 20% cheaper to live in than the UK.

No this has happened before to Spain and France 2 years ago. Complaints were raised and SLC just ignored them and lowered the thresholds. It turns out there methods for assigned the repayment threshold are as poorly calculated as there interest charges. Countries are binned into 7 catagories based on if the cost of living is more or less than the UK. As the UK inflation skyrockets it now means that western europe is apparently a cheaper place to live even though the relative change here is only a few percent or less. It is a cliff edge to the next band down. Another case of loans being misold and designed so unfairly it would be illegal for any lender to adopt the same practises.

Martina Lewis please fight to make this fair.

silvercar

I guess that those living abroad are an easy target, as the numbers are too small to have big campaigning power and are dispersed around the world.

It's also a reflection of the plan 2 thresholds for those living in the England, if the thresholds have dropped for those living at home and paying tax to the UK government, it makes sense that those overseas should also see a threshold drop.

I appreciate it won't be what you want to here, but I doubt there is anything you can do about it.

Foay97

Just a little update the repayment threshold brackets in 2025/26 were as follows. This is SLC interpretation of is the world bank price level index for rating the cost of living across the world. You can see they are grouped in brackets of 20% on the thesholds. How they are grouped SLC could not/ were not willing to share.

40 % more £39,860.00- Bermuda and Barbados

20% more £34,165.00 here go countries like switzerland and the USA where living is more expensive

The Benchmark £28,470.00- This is the UK Bracket, here you'll find countries equally expensive to the uk like Monaco. This also used to Include western Europe France, Spain, Belgium, Netherlands Germany and Austria.

20% less £22,780.00 Here we find countries that are much cheaper to live in like as of 2023 France and Spain. Now in 2026 Germany too and I suspect most of western europe will be moved to this band

40% less £17,085.00 Brazil and most of south american go Here

60% less £11,390.00 Rest of South america and most of Africa fall here

80 % less £5,695.00 Afghanistan and Albania fall here

The exact formual used for binning I can't find in any documentation i have from student laons and I have requeste.

A quick google suggest the difference in cost of living is between 1 to 6% cheaper in germany but varries significantly by region. This is just another example of something misold and never explained or agreed to.

Foay97

I would also like to add the minium yearl wage in germany is €26,700 which converted to pounds is £23,213.51 so anyone on full time employment must now repay student loans.

silvercar

you could always do a freedom of information request, if you want to see how the thresholds were decided.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81880253#Comment_81880253

Mirroring the freeze on plan 2 payment thresholds from 2027. So there is logic in the change, though it seems to impact you one year earlier. I can see the logic in saying that if there is a freeze in thresholds in the UK, leaving those in minimum wage full time employment having to make some repayments, the same should apply overseas.
Though remember the UK government has no influence in setting minimum wage levels overseas, in some countries minimum wage is relatively high due to their economic policies.