If you studied within the UK, you might be one of many thousands and thousands of former students with a loan from the Student Loans Company (SLC) that you want to repay.
For those that have a job within the UK, the method is simple: as long as your employers have the right data, the cash comes instantly out of your paycheck. But issues get significantly extra difficult in case you transfer abroad.
This article will let you know how UK student loan repayments work in case you transfer away from the UK. The matters that can be lined are:
Are you dwelling overseas, however must repay your student loan within the UK? If you want to make worldwide funds to do that, Wise might prevent cash versus your bank
Before you get began, a little bit of details about worldwide funds.
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What occurs to your student loan once you’re transferring overseas?
The brief reply to that is: not very a lot. It will nonetheless be there, nonetheless gaining curiosity, nonetheless awaiting compensation. You might have moved overseas, however you haven’t escaped your money owed.
As this text will clarify, although, you’ll must carry on high of the paperwork.
Will your student loan be written off once you’re dwelling overseas?
Sadly not. Your student loan gained’t be cancelled simply since you’re transferring abroad. You’ll nonetheless must pay it again.
If you don’t, the penalty is a “fixed monthly payment” that it’s important to pay as an alternative of the conventional month-to-month compensation quantity. It’s prone to be way over you’d must pay otherwise¹⁺².
How a lot do it’s important to pay in your student loan once you’re working overseas?
When you’re dwelling and dealing overseas it’s important to repay your student loan below the identical circumstances you’d in case you lived within the UK: in case your wage is above a specific amount. In the UK, that quantity is presently £18,935 in case you began your course earlier than 1 September 2012 (Plan 1), or £25,725 in case you began it afterwards (Plan 2). For postgraduates, the restrict is presently £21,000. ³ These quantities are for an annual wage.
As we’ll clarify under, in case you’re abroad, these figures could also be a bit of totally different, due to the differing prices of dwelling in international locations across the world³.
You might not have to begin repaying immediately once you transfer overseas. Check with an advisor, as you is perhaps allowed a grace interval as you type every part out.
Just like within the UK, the quantity it’s important to pay again is 9% of your earnings, above the compensation threshold talked about earlier. You must repay every month.
However, whereas that threshold is £18,935 (Plan 1) or £25,725 (Plan 2) within the UK, the brink for the nation you’re dwelling in is perhaps totally different. That’s as a result of the SLC components within the relative financial energy of every nation.
In stronger economies just like the USA or France, the determine would be the similar as within the UK. In notably costly international locations it might be increased: in Switzerland, as an example, it’s £26,510 (Plan 1) or £36,015 (Plan 2). On the opposite hand, in case you transfer to a rustic the place the price of dwelling is decrease, the brink can be decrease as effectively. If you progress to Uganda, as an example, you’ll pay again your loan on earnings above £7,575 (Plan 1) or £10,290 (Plan 2) ¹⁺².
What occurs along with your student loan once you’ve been dwelling overseas for five years?
Ignore any rumours on the contrary: nothing particular occurs after 5 years of dwelling abroad. You nonetheless must pay.
Of course, you should still get your debt written off ultimately, however that is determined by what kind of loan you’ve, and never whether or not you’re dwelling within the UK or abroad. The debt is written off after 25 or 30 years, relying on once you began repaying. Or, in case you took the loan earlier than 1 September 2006, it’s written off once you flip 65 ³.
You solely must hassle doing this in case you’re going overseas for greater than 3 months. Otherwise, you’ll nonetheless be within the British system and can simply decide up the place you left off once you return to the UK³.
How are you able to repay your student loan once you’re dwelling overseas?
Here’s a step-by-step information to sustain along with your student loan abroad.
Step 1: Notify the SLC earlier than you go.
It’s a good suggestion to get in contact with the Student Loans Company earlier than you progress overseas and inform them what you’re doing and the way they will get in contact with you. The very last thing you need is for them to be pursuing you as a result of they assume you’re attempting to get away with out paying.
Step 2: Fill within the Overseas Income Assessment Form.
The key distinction along with your student loan repayments whilst you’re overseas is that you simply repay them on to the SLC, fairly than through your employer and the month-to-month paycheck. Therefore, the SLC must see proof from you relating to what you earn.
That’s the place the Overseas Income Assessment Form is available in. Fill this out with particulars of your transfer overseas and your employment state of affairs.
Alongside this way, you’ll want to offer proof. If you’re going to be employed overseas, they’ll must see⁴:
- Copies of your final 3 months of payslips, or
- A signed, dated copy of your contract – in case you began in that job within the final 6 months.
If you’re self-employed, however, they’ll want⁴:
- Copies of your monetary accounts, as current as you’ll be able to, confirming your gross annual revenue. A pile of invoices isn’t acceptable for this. Or
- A letter out of your accountant confirming your gross annual revenue.
However, if that is nonetheless your first yr of self-employment, it’s possible you’ll effectively not have both of the above. In that case, they’ll make do with⁴:
- Copies of your bank statements from the final 3 months, displaying your identify and the funds you utilize to assist your self, or
- The “Third Party Declaration” on the Overseas Income Assessment Form. If you’re being supported by another person whereas dwelling overseas, that particular person ought to fill on this part of the shape to substantiate their monetary assist.
If you’re not employed, you’ll want to offer paperwork that show what you’re doing apart from working. This might include⁴:
- Proof of presidency advantages you’ve acquired inside the final yr
- Proof of assist by a 3rd occasion – fill within the type, as detailed above
- Proof that you’ve sufficient financial savings to reside on
- Proof that you simply’re travelling, plus proof you’ll be able to assist your self whereas doing so
- A letter from the corporate you’re volunteering with, confirming that they’re supporting you
- A letter out of your place of additional examine, confirming you’ll be learning there. Or they will full the Third Party Declaration.
It could also be roughly easy so that you can present the requested documentation. Just try to fulfill all of the circumstances they ask for: as long as you’re sincerely attempting to inform them what your revenue is, it is best to get there ultimately.
Step 3: Keep them posted.
It would possibly take some time, however as soon as the SLC are glad, the system ought to work like clockwork: they’ll take the cash out of your account every month, and simply ship you the occasional pleasant reminder that you’re tens of 1000’s of kilos in debt.
However, they’ll in all probability ask you to substantiate your revenue yearly. So be looking out for publish from the SLC as they request an replace in your state of affairs. You may even apply for a reassessment your self, in case your revenue stage adjustments significantly⁵.
How are you able to repay the Student Loans Company from overseas?
On the Overseas Income Assessment Form, you’ll see that the SLC ask on your UK bank particulars. That’s to allow them to arrange a Direct Debit, which is the simplest means so that you can pay, as the cash will come instantly out of your account through a daily compensation schedule. There’s a catch, although: having to repay by direct debit, means you’ll want to make use of a UK bank account. Potentially not the best resolution in case you’re now incomes cash overseas, as this implies you’ll must pay charges to make a world fee and your cash needs to be exchanged again to British kilos.
The trick is simply to be sure you have a gradual stream of cash flowing again into your UK account, though you’re dwelling and incomes abroad. Wise could possibly be the best resolution right here: it permits you to make a world switch at the actual mid-market charge, and with solely low, clearly acknowledged charges every time.
Wise is a good way to save lots of that little bit additional once you’re sending a reimbursement residence. After all, once you’re nonetheless 1000’s upon 1000’s of kilos in debt out of your student days, each little helps…
Sources used for this text:
1.Student loan compensation – Overseas thresholds Plan 1
2.Student loan compensation – Overseas thresholds Plan 2
3.Student loans – SLC information to phrases and circumstances, 2019/2020 (web page 7 + 13)
4.Evidence data sheet – Overseas Resident
5.Student loan, repaying from abroad
*All sources checked on June 5, 2019
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