CSLM16010 - SL and PGL repayments: calculation of loan repayments: student loans repayable to HMRC

Government funded loans have been available to students in higher education for a number of years. In 2000 legislation was raised, (The Education (Student Loans) (Repayment) Regulations 2000), which

  • Introduced a new type of loan, known as the income contingent loanAnd

    • Authorised HMRC to collect repayment of these new loans from the majority of borrowers

    That legislation has since been consolidated and revised into The Education (Student Loans) (Repayment) Regulations 2009.

    The main features of the income contingent loans are

    • The loans may be granted to students undertaking a course in higher education that commenced after August 1998. Note: Students whose course commenced, or gained their place on the course, before August 1998 would have been offered the earlier type of loan that is repayable directly to the Student Loans Company
    • Students receiving the earlier mortgage style loans cannot change to the new income contingent loans part way through a course
    • Repayments may commence from 6 April following the date that the student ceased the course, either by graduation or withdrawal
    • HMRC is responsible for collecting repayments from borrowers who are resident in the UK
    • There are thresholds below which no repayments need be made
    • Borrowers with income above the threshold will repay the loan on the basis of a percentage of the excess over the threshold. The rate may be subject to change
    • Borrowers within PAYE will make repayment by way of deductions from earnings

    Borrower with more than one type of loan

    Many students undertake more than one course of higher education. It is therefore possible for a borrower to have

    • An earlier mortgage style loan, repayable to the Student Loans Company for the first course

    And

    • An income contingent loan, repayable to HMRC, for a later course

    Under certain circumstances the borrower can apply for deferment of repayments in respect of one of the loans. This must be considered by the Student Loans Company and is of no concern toHMRC.