Student loan overseas thresholds

flipflop2026

The overseas threshold rates for countries such as Germany and Belgium, have not been frozen, they have been decreased by almost £5000 for 2026 - 2027, as the UK has been deemed to be more expensive to live in in 2026.

There has been no negative inflation in countries such as Germany (1.8% in Dec 2025) to reduce the cost of living in 2026. I could understand (some what reluctantly) if the threshold had been frozen at its current level in Germany and the threshold increased in the UK. To conclude that the German cost of living has reduced and therefore ex-students need less money to live there, and hence should be paying more of their income in increased loan repayments is not correct.

The correct interpretation of the UK becoming more expensive to live in, is to increase the UK threshold to account for the increase in the cost of living.

As regarding the feeling of been mis-sold, I totally agree. At no point was I aware that the threshold could decrease throughout the lifetime of the student Plan 2 loan.

silvercar

but the UK threshold is dropping next year (in real terms), so it makes sense that overseas thresholds also drop.

Foay97

https://forums.moneysavingexpert.com/discussion/comment/81882229#Comment_81882229

I'm sorry Silvercar this is not correct for plan 2 loans. Please correct your previous response as these are misleading. Implying that anyone on minimum wage in the cost of living crisis should have an effective extra tax and addional interest on there student loan is frankly immoral.

The thresholds for the UK will increase again this year marginaly then be frozen for 3 years. This is at least true for the moment. Terms are not fixed is the only certainty in the students loan system now. If they were to drop them by 5K and then freeze for 3 years for those in the UK There would be protests in London with a million people on the streets.

The only rational here is the UK goverment wants more money from people who have moved oversees and feels it will get away with it. The guidence given when taking out the loans is thresholds will be update yearly in lines with living costs. when the loans where taken out France germany belgium all had freshold that were equal to the UK. The living cost in germany have increased significantly 30% in the last 10 years the uk has seen slightly higher arround 37%, both aproximate values. So how then can it be justified to drop the threshold by 20% if cost of living has increased by 305?.

Perhaps we should just label it as a traitor tax for those that have left the UK.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81882472#Comment_81882472

While student loan thresholds are being frozen in cash terms, it acts as a real-terms reduction (or "fiscal drag") because the threshold will not increase in line with inflation or rising wages, meaning graduates will pay more of their income towards their loans. So it actually is a drop in real terms even if the numbers stay the same.

https://blog.moneysavingexpert.com/2026/01/beware-plan-2-student-loan-repayment-freeze/

Foay97

https://forums.moneysavingexpert.com/discussion/comment/81882627#Comment_81882627

You have conflated fiscal drag of freezing the loan repayment theshold and the absolute lowering of the threshold in France, Germany and Belgium compared to when the loans where taken out.

The difference for 2 people earning 30K a year with 4% increase each year if they live in the UK or Germany will be £883 for the UK and £3007 for someone in germany. So those in europe will pay an extra £2124 pounds.

Please see below to see how it will change year on year now

UK France, Germany, Belgium

Year Loan threshold Salary Reapyment Loan threshold Salary Reapyment

2025 28.4K 28.8K 36 28.4K 28.8K 36

2026 29.4K 30K 54 23.5K 30K 585

2026 29.4K 31.2K 162 23.5K 31.2K 693

2026 29.4K 32.45K 275 23.5K 32.45K 806

2026 29.4K 33.75K 392 23.5K 33.75K 923

confusingstudentfin

https://forums.moneysavingexpert.com/discussion/comment/81882627#Comment_81882627

But the point is that if you are in the UK it has been frozen 'only' in cash terms, and therefore dropping in real terms.
Whereas if you are in, for example Germany, the threshold has dropped in cash terms and therefore an even greater drop real terms (cost of living is also increasing in Germany).

For example if I live in the UK and my income does not change, the repayments do not change. While if I live in Germany and my income does not change, the repayments will increase.

The minimum wage works as a very good example. To quote the government's own website "Overseas thresholds are based on living costs in each individual country.", ie. the idea is that everyone, not matter where you live, starts to repay at the same relative threshold. If we look at the UK minimum wage, it is below the repayment threshold for the UK. Cost of living is different in different countries, and of course the UK government does not control the minimum wage outside of the UK but we can map the UK minimum wage to other countries based on the difference in cost of living. In the UK, assuming, a 40 hour week and working 52 weeks a year, since April 2025, that is £25,396, map this to Germany, assuming cost of living is let say 6% cheaper, then the mapped minimum wage is £23.8722, which is above the repayment threshold for Germany. So even on an equivalent minimum wage, in one country you are above the repayment threshold and in another you are below.

A fundamental issue for me with all of this is that it is very hard to understand the decision they have taken - they closest thing to an explanation (which SLC is appears completely unable to provide) is that:

• the thresholds for overseas repayments are calculated based on World Bank Price Level Index (PLI) - this you can find on the government website (SLC did not/could not direct me there, I feel that expecting them to be able to do at least that is not too much to ask). There is no explanation on how this data is used to calculate the thresholds. The only data I can find for the PLI is from 2024, for the UK it is 140.5, for Germany it is 131.6, which corresponds to approximately a 6% difference in PLI/cost of living.
• on that same website it says the thresholds are meant to be set each year, which leaves 2 options: 1. they have not been recalculating it each year, and so the threshold has a sudden very large drop, 2. what ever method they use to recalculate the threshold for some reason has resulted in this drop for 2026-2027 while previously it was moving in line with the UK threshold.
• The only 'logical' explanation is the one provided by Foay97 earlier post where this binning method is used. 'Logical' is limited because the cost of living between 2025/26 and 2026/27 in Germany has certainly not suddenly decrease by £5,000.

The SLC should be able to explain what is going on, it seems like they cant. It certainly should not be falling to forum members here to explain how the government/SLC is arriving at these decisions.

silvercar

I wonder if there is some catch up going on, from a perceived inequality in previous years?

you could always do a freedom of information request asking how the thresholds abroad are calculated.

silvercar

Article touched on this point in today's Sunday Times. Be careful what you wish for - New Zealand reduced their interest rate for all students, except those working overseas as they were not paying tax into the local economy!