Student loan repayment interest

Marco_Brandon · 9 June 2019 at 4:59PM

Hi guys,

Hoping someone can clarify this for me

.

Something occurred to me the other day when I was looking through my student loan statement for the previous year. I am on Plan 1, and repay at 9% above earnings of £18k.

Interest is applied to my outstanding loan balance on a monthly basis.

Equally, student loan deductions are applied monthly from my salary through PAYE but they are credited to my student loan account well after the end of the tax year.

Shouldn’t the monthly PAYE deductions of student loans be credited to my student loan balance on a monthly basis since I am being charged interest on a monthly basis?

Due to the mismatch surely I am being placed in a disadvantage position I.e. overpaying interest?

I look forward to your thoughts on this.

easterbunni · 9 June 2019 at 8:51PM

The monthly payments are also applied as if they were paid monthly, and then the interest adjusted appropriately.

There are changes coming up soon where your loan is updated on a weekly basis as the SLC update HMRC more often.

Branchini1979 · 10 June 2019 at 9:17AM

Could someone please help me!!
I am trying to get my head round this all and for 2018/19 I paid £120 a week SL and thus £1440 for that year, yet all that was taken off was £485, so nearly a whole £1000 unaccounted for!!!

I know some of it was interest added, but was only a couple of hundred pounds so does the government really take £800!!!

Seems unfair!!

Gaz83 · 10 June 2019 at 9:21AM

Branchini1979 wrote: »

Could someone please help me!!
I am trying to get my head round this all and for 2018/19 I paid £120 a week SL and thus £1440 for that year, yet all that was taken off was £485, so nearly a whole £1000 unaccounted for!!!

I know some of it was interest added, but was only a couple of hundred pounds so does the government really take £800!!!

Seems unfair!!

Your figures don't add up.

Nasqueron · 10 June 2019 at 9:56AM

Branchini1979 wrote: »

Could someone please help me!!
I am trying to get my head round this all and for 2018/19 I paid £120 a week SL and thus £1440 for that year, yet all that was taken off was £485, so nearly a whole £1000 unaccounted for!!!

I know some of it was interest added, but was only a couple of hundred pounds so does the government really take £800!!!

Seems unfair!!

Did you change jobs mid tax year?

I changed employer (albeit via TUPE) and the SLC statement was also short and I found on the SLC site that HMRC send total payments separately if you have 2 jobs so my payments from the 7 months in the new job were not on there, they should be applied later.

The increase from 1.5% to 1.75% interest is annoying too but I am at least paying off more than interest is added so might get it down eventually, unless they keep upping the interest.

Marco_Brandon · 10 June 2019 at 2:23PM

I believe the statements for the 2018/19 tax year are not ready yet, so you might be looking at repayments for the previous tax year.

Call the SLC and ask for further guidance. They are very helpful and answer the phone relatively quickly.

Someone asked if you changed jobs part way through the year. This could lead to a temporary discrepancy but will be rectified as HMRC supply them with the details. In any case, just call them up.

Nasqueron · 10 June 2019 at 5:24PM

Marco_Brandon wrote: »

I believe the statements for the 2018/19 tax year are not ready yet, so you might be looking at repayments for the previous tax year.

Call the SLC and ask for further guidance. They are very helpful and answer the phone relatively quickly.

Someone asked if you changed jobs part way through the year. This could lead to a temporary discrepancy but will be rectified as HMRC supply them with the details. In any case, just call them up.

The statements are ready, I already had mine

Changing jobs is enough of an issue that the SLC list it on their website - they clearly state that if you do, they get a second update from HMRC with the extra money from the new job (assuming you are still repaying of course)

stu2500 · 12 June 2019 at 4:41PM

Branchini1979 wrote: »

Could someone please help me!!
I am trying to get my head round this all and for 2018/19 I paid £120 a week SL and thus £1440 for that year, yet all that was taken off was £485, so nearly a whole £1000 unaccounted for!!!

I know some of it was interest added, but was only a couple of hundred pounds so does the government really take £800!!!

Seems unfair!!

The SLC didn't take any deductions into account for three years for me, all I had to do was send proof (P60's) to them and they amended it. Also, deductions won't show till the end of the year for that specific year

Marco_Brandon · 11 November 2019 at 11:23AM

Marco_Brandon wrote: »

Hi guys,

Hoping someone can clarify this for me .

Something occurred to me the other day when I was looking through my student loan statement for the previous year. I am on Plan 1, and repay at 9% above earnings of £18k.

Interest is applied to my outstanding loan balance on a monthly basis.

Equally, student loan deductions are applied monthly from my salary through PAYE but they are credited to my student loan account well after the end of the tax year.

Shouldn’t the monthly PAYE deductions of student loans be credited to my student loan balance on a monthly basis since I am being charged interest on a monthly basis?

Due to the mismatch surely I am being placed in a disadvantage position I.e. overpaying interest?

I look forward to your thoughts on this.

I am just following up on my earlier post. I have just spoken with the SLC and they have said that since April 2019 interest is calculated on a monthly basis and adjusted accordingly taking into account the monthly repayments I have been making through PAYE.

This only applies from 6 April 2019 onwards, whereas in the prior years interest was calculated on the entire balance outstanding for the whole year, because the SLC only received the payment from HMRC well after the end of the tax year.

This CANNOT be fair. I have lost the benefit of the £400 or so on a monthly basis that they deducted, yet I got charged interest for a whole year each year? What is the best way to complain about this and have it reviewed?

If successful many graduates may be due a repayment or at least a reduction to their outstanding loan amount.

Birdie100 · 13 November 2019 at 5:39AM

Marco - it May be that since April 2019 the payments are made by HMRC monthly to SLC. But I can assure you that in previous tax years, I have had statements just before HMRC sent the payment (and so would see interest being charged rising each month) and then after the payment. The payments, although applied on one day, were backdated to the relevant month for interest calculation. The interest charged each month was then recalculated. I can literally see by comparing them that the interest then fell per month (exactly as you’d expect).

Student loan repayment interest

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