Do I Need to Pay My Student Loan if I Leave the Country?

Student loans in the UK have become an integral part of financing higher education. With a significant portion of the population relying on these loans to pay for university tuition and living expenses, questions about repayment obligations are common. One such question often asked is: Do I need to pay my student loan if I leave the country?

The short answer is yes, you still need to repay your student loan even if you move abroad. However, the specifics of how you repay and how much you pay can vary depending on your circumstances. Let's break it down.

How Does Student Loan Repayment Work When You're Abroad?

When you move abroad, your student loan repayment doesn't simply disappear. The government expects you to continue repaying your loan, much like you would if you were living in the UK. However, the way you repay will change:

1. Income Thresholds Differ by Country: The repayment threshold—meaning the amount you need to earn before you start repaying your loan—varies depending on the country you live in and the student loan plan you have. This threshold is adjusted to reflect the cost of living in different countries. For example, if you're living in a country with a lower cost of living than the UK, the repayment threshold may be lower. Here are some examples of the income thresholds based on both Plan 1 and Plan 2 student loans for a selection of popular destinations.

Plan 1:

Australia, New Zealand, United States & Canada £29,990

France, Spain & Italy £19,995

United Arab Emirates £19,995

Plan 2:

Australia, New Zealand, United States & Canada £32,755

France, Spain & Italy £21,840

United Arab Emirates £21,840

1. Repayment Rates: Once your income exceeds the local threshold, you'll be required to repay 9% of your income over that amount. This percentage is consistent regardless of where you live, but the actual threshold can make a significant difference in how much you repay each month.
   

2. Currency Conversion: Since your repayments will be calculated in the local currency of the country you're residing in, currency fluctuations can impact the amount you need to pay when converted back into pounds. The Student Loans Company (SLC) will handle these conversions and inform you of your required repayment amount.
   

3. Self-Reporting Your Income: Unlike in the UK, where your repayments are automatically deducted from your salary via PAYE, when living abroad, you need to self-report your income to the SLC. They will require evidence of your earnings, such as payslips or tax returns, to determine how much you need to repay.
   

4. Annual Reviews: The SLC will review your repayment plan annually based on your income and cost of living in your new country. It's important to keep them updated with your current circumstances to avoid any issues.
   

What Happens If You Don’t Pay your Student Loan?

Failing to make your student loan repayments while living abroad can lead to serious consequences:

• Penalties: The SLC can impose penalties for non-payment, which can include adding interest to your loan or even taking legal action to recover the debt.
  

• Increased Debt: Ignoring your repayment obligations can result in your debt growing due to added interest and penalties, making it harder to clear your loan in the future.
  

• Credit Impact: Your credit score may be affected if you don’t keep up with your repayments, which can impact your ability to secure loans or mortgages in the UK or abroad.
  

Steps to Take If You Plan to Move Abroad

If you're planning to leave the UK and have an outstanding student loan, here are some steps to ensure you stay on top of your repayments:

1. Inform the SLC: Notify the Student Loans Company about your move abroad as soon as possible. Provide them with your new contact details and any necessary documentation.
   

2. Submit Income Details: Be prepared to submit regular income documentation to the SLC to calculate your repayment amount.
   

3. Set Up a Repayment Method: Ensure you have a reliable way to make payments from abroad, whether through direct debit, bank transfer, or another method.
   

4. Keep in Touch: Stay in contact with the SLC to manage your repayments and avoid misunderstandings.

Conclusion

Leaving the UK doesn’t absolve you of your student loan obligations. While the process of repayment will differ when you're living abroad, the responsibility remains.

By staying informed and proactive, you can manage your student loan repayments effectively, no matter where you are in the world.