[holding answer 10 February 2009]: The two types of student loan have different repayment terms. Borrowers with income-contingent loans introduced in 1998 repay 9 per cent. of earnings above £15,000.
Repayments are usually collected through the tax system via employers, alongside income tax and national insurance contributions. Borrowers with the older mortgage-style loans repay instalments, usually by direct debit, when their annual income exceeds the repayment threshold, currently £25,936.
With both types of loan, repayment is due to start in the April after borrowers graduate or otherwise leave their course, if their income is above the relevant repayment threshold. This point is known as the Statutory Repayment Due Date (SRDD). Some borrowers fully repay before they are required to commence repayments.
The average time taken to fully repay mortgage-style loans is six years after SRDD, according to data at 31 March 2008. It is not yet possible to give a meaningful average time taken to repay income-contingent loans, because in terms of repayments the income-contingent loans scheme is still relatively young. The longest and shortest time taken to repay a loan cannot be disclosed as this could potentially identify an individual.
(2) what the (a) highest and (b) average amount owed to the Student Loans Company was by students graduating from UK universities in 2008.
[holding answer 10 February 2009]: Borrowers who graduated in 2002 with income-contingent loans would generally be included in the 2003 repayment cohort, i.e. those required to begin repaying loans from April 2003 if their income was high enough. The average annual repayment for this cohort was £600 in tax year 2006-07, equivalent to a monthly repayment of £50. Repayments are linked to income; borrowers repay 9 per cent. of earnings over £15,000.
Students who graduated in 2008 will generally be required to start repaying student loans from April 2009, if their income is above the £15,000 threshold.
Data are not yet available for the average amount owed by students who graduated in 2008. The average amount owed for the cohort of students who were liable to repay from April 2008 was £9,580.
The highest monthly repayment and highest amount owed cannot be disclosed as this could potentially identify an individual.
Borrowers repaying income-contingent loans via the tax system in tax year 2006-07 with known earnings are shown in the following table.
Earnings band Borrowers £15,000 to £34,799.99 356,200 £34,800 and over 26,900 Source: Student Loans Company
£15,000 to £34,799.99
£34,800 and over
Student Loans Company
In addition there may be other borrowers who have made repayments that have not yet been recorded at SLC. HMRC receive annual P14 returns from employers, setting out the deductions they have made in the past year. This information is passed to SLC to update borrowers’ accounts. There will also be some whose earnings have fluctuated during the year and who have therefore made repayments in some months but have earnings below the threshold at the end of the financial year. Such borrowers may apply for a refund of their repayments if they wish to do so.
Borrowers are required to begin repaying their loans in the April after they graduate or otherwise leave their course, if their income is above the repayment threshold. Those below the threshold will include borrowers who have gone on to further study.