Do you know what to do with your student loan if you move abroad? Going to teach English in China? Volunteering with elephants in Thailand? Don’t forget about your loans back in the UK. Get the low down in our complete guide for repaying your student loan from abroad below.
Do I need to repay my loan if I move abroad?
Yes, you do need to repay your student loan, even if you have moved abroad.
However, unlike in the UK, your repayments will not be taken out automatically. You will be responsible for the upkeep of these payments so that further down the line you don’t get hit with unexpected charges or worse. It is a bit of information overload, so we’ve cut out the jargon and laid it out simply below.
What happens to your student loan when you move abroad?
If you are moving abroad for longer than three months then you will have to contact the Student Loans Company (SLC) to organise your student loan payments.
When you live in the UK, you don’t have to think about repaying your loan as HMRC takes the money automatically from your paycheck if you breach the threshold. However, once you move abroad the HMRC can no longer do this and it’s up to you to get in contact with SLC.
The Overseas Income Assessment Form
You can let the SLC know about your living and income situation by completing an Overseas Income Assesment Form (OVFA) which can be downloaded from the SLC website. You will have to return the form with evidence displaying how much you currently earn and if you are eligible to repay the loan. You only start repaying when you earn over a certain salary, so you needn’t worry if you are studying, travelling, volunteering or unemployed. But you will still need to supply evidence of this.
What types of evidence will I need to submit?
The evidence you’ll have to provide differs depending on what exactly it is you’re doing abroad. Below is an example of some of the evidence required, always check with the SLC for exact details:
- Employed – You’ll need to provide three months payslips and a contract of employment.
- Self-employed – Provide a bank statement confirming your gross annual income.
- Unemployed – You’ll need to provide evidence of the benefits you receive.
- Studying – You need something which confirms you’re studying. This cannot be a letter with an offer of a place but can be a letter confirming you’ve accepted your place such as a loan agreement, a grant letter or a student card, etc.
- Living off savings – You’ll need bank statements which show this.
- Travelling – Send your travel itinerary and bank statements which show what money you’re living off.
- Volunteering – You’ll need a letter from the organisation you’re volunteering with confirming the amount of support they’re providing you with.
- Supported by someone else – You must fill in the Third Party Declaration part of the form and you must provide your bank statement.
How much student loan do you repay when overseas?
What you repay will be similar to the repayments you currently undertake in the UK.
Below we’ve laid out some information on repayments for both Plan 1 and Plan 2 loans.
Plan 2 loans
You’ll have a Plan 2 loan if you started uni since 2012 in England and Wales.
Living in the UK, you would pay back 9% of anything you earn over £25,725 a year.
It’s the same process when you’re living abroad. The SLC works out what the equivalent repayment threshold is in your new country of residence and calculates your repayments.
Below we have given you a few examples of equivalent repayment thresholds:
Overseas repayment thresholds – Plan 2 loans
The SLC has a full list of countries and the equivalent repayment thresholds on their website – the lower income threshold marks the point when you start repaying your loan.
Interest rates are applied in the same way as they are when you live in the UK.
You can use the SLC table to view the upper and lower income threshold for each country, which will determine the level of interest you’ll repay on top of your current student loan.
There is also a column titled Fixed Monthly Repayment – this is how much you’ll be asked to repay if you fail to notify the SLC how much you’re earning. This is something to be wary of as if you don’t keep the SLC up to date while you’re away, they’ll require you to repay with those payments once you relocate back to the UK.
Plan 1 loans
You’ll be on the Plan 1 loan if you started uni between 1998 and 2012 in England and Wales, or since 1998 in Scotland or Northern Ireland.
For a Plan 1 loan in the UK, you currently pay back 9% of what you earn over £18,935 a year. So when you’re abroad you’ll pay 9% of whatever you earn over the equivalent repayment threshold for that country.
Below we have provided a few example repayment thresholds for Plan 1 loans:
Overseas repayment thresholds – Plan 1 loans
What happens if your circumstances change?
When the SLC decide how much you need to repay, they’ll set up your payments to occur monthly for 12 months.
However, if your circumstances change, such as you become unemployed or your annual pay drops to below the repayment threshold, you then need to apply for a reassessment.
Remember that your student debt will be wiped after 30 years, so don’t pay money when you don’t have to, and if you overpay, make sure you apply for a refund.
Moving Your Stuff Abroad
Once you’ve finished packing up all of your stuff, you then face the challenge of moving all of your personal belongings to your new home at college. It’s a daunting task, especially if you’re moving to another state, or perhaps moving to college from somewhere overseas!
Thankfully, that’s where My Baggage comes in. We specialise in transporting belongings all over the world. We’re trusted by 30,000 customers across the globe. You can read more about our services here. You can also check out My Baggage reviews too. Get a quote below!