Repaying your Student Loan from abroad
You may have got to grips with your Student Loan repayments in the UK, but what happens if you move abroad? Don't bury your head in the sand, get clued up with our complete guide...
It's one of the most commonly asked questions about Student Loans in the UK – do you have to repay your loan if you move abroad?
In a nutshell, yes you do – but your repayments will no longer be automatic, and you'll have to put in the legwork so you don't get stung with charges (or worse) later.
While it can be a bit of a headache to work out, we've cut the jargon and gathered the facts to make it as easy as possible for you.
What’s in this guide?
What happens to your Student Loan when you move abroad?
If you're moving overseas for longer than three months then you need to contact the Student Loans Company (SLC) to sort out your Student Loan repayments.
While you're living in the UK, you don't really need to think about repaying your Student Loan, as HMRC takes the money automatically from your salary each month before you even see it – and gives it straight to the SLC.
Once you move abroad, HMRC is no longer in control, and it's up to you to tell the SLC how much you're earning and provide evidence for that. They'll set your repayment schedule accordingly.
Overseas income assessment
You can tell the SLC about your living situation and how much you're earning online on your Student Finance account.
You'll have to provide some evidence regarding how much you're earning, or where your money is coming from.
You only start repaying your Student Loan when you're earning a certain amount of money – so you won't need to repay anything if you're studying, volunteering, travelling or unemployed, for example. However, you will still need to provide evidence of this.
The evidence you'll have to submit varies depending on what exactly it is you're doing while abroad. We've listed some different occupations and the accompanying evidence needed below, but always check with the SLC for exact details:
- Employed – Send one of the following:
- Three months' payslips, or
- A contract of employment (signed by you and your employer, dated within the last six months) if recently employed.
- Self-employed – Send one of the following:
- Copies of your most recent financial accounts confirming your gross annual income (invoices are not acceptable evidence), or
- A letter from your accountant (dated within the last six months) confirming your gross annual income, or
- Bank statements dated within the last three months if this is your first year of being self-employed, or
- A Third Party Declaration if someone else is supporting you.
- Unemployed and receiving government benefits – Send evidence of the benefits you received within the last year.
- Studying – Send one of the following:
- A letter from your place of study confirming your attendance for the current academic year (note: offer letters are not accepted), or
- A letter from your place of study confirming the award of a grant, stipend or scholarship for the current academic year, or
- A Third Party Declaration with evidence of the support this third party provides to you (e.g. copies of your bank statements dated within the last three months with your name on).
- Living off savings – Send bank statements dated within the past three months which show the full amount. Note that if these show significant payments going into your account (either one-off or ongoing), you may be asked to provide additional evidence to explain the source (e.g. an employment pay-off, or transferring money from a savings account).
- Travelling – Send your travel itinerary and bank statements dated from the past three months. You may also be required to provide a valid visa depending on your country of residence. In addition, if you're doing casual work while travelling, you will need to provide copies of payslips with a note explaining the situation.
- Volunteering – Send a letter from the organisation you're volunteering with, dated within the past year, confirming the amount of support they're providing you with.
- Supported by someone else (e.g. parent, guardian or partner) – Complete the Third Party Declaration and send bank statements dated within the past three months, where both your name and how much support they've given you are visible.
How much Student Loan you repay when overseas
Essentially you'll be repaying exactly the same as you would be if you were still in the UK. It's just a little bit more complicated to work out what that should be.
The exact amount will differ based on which plan your loan is, which itself is determined by when you started uni, where you normally lived (outside of term time) when you started uni, and what level of study your course was.
The table below should tell you what type of loan you have – all you need to do is click and you'll be taken to the info that's relevant to you.
|You got your loan from...||Undergraduate (started uni between 1st September 1998 and 30th August 2012)||Undergraduate (started uni on or after 1st September 2012)||Postgraduate|
|England||Plan 1||Plan 2||Postgraduate Loan|
|Northern Ireland||Plan 1||Plan 1||Plan 1|
|Scotland||Plan 4||Plan 4||Plan 4|
|Wales||Plan 1||Plan 2||Postgraduate Loan|
Plan 1 loans
The amount you repay while living abroad will be the same as you'd make in the UK, but converted into the equivalent amount of money for the country you're living in.
For a Plan 1 loan in the UK, you currently pay back 9% of what you earn over £19,895 a year. So when you're abroad you'll pay 9% of whatever you earn over the equivalent repayment threshold for that country.
However, if you fail to notify the Student Loans Company of how much you're earning, you'll be charged a 'Fixed monthly repayment'. This varies from country to country but can be close to £300 a month.
As for interest? It accrues at exactly the same rate as it would if you were still in the UK (1.1% – more on that here).
The table below provides some examples of the repayment thresholds in different countries for Plan 1 loans:
Overseas repayment thresholds – Plan 1 loans
Therefore, if you lived in Australia, you would repay 9% of everything you earn over £23,875 (or the equivalent in Australian Dollars).
You can find a full list of the Plan 1 repayment thresholds for each country, plus the fixed monthly repayments, on the government's website.
Plan 2 loans
Living in the UK, you would pay back 9% of anything you earn over £27,295 a year – you can see the full breakdown in our guide to Student Loan repayments.
The exact same happens when you're living abroad. The SLC essentially works out what the equivalent repayment threshold is in your new country of residence, taking into account a range of factors such as the cost of living and average salaries.
If you fail to notify the SLC of your latest earnings, you'll be charged the 'fixed monthly repayment' instead. This also varies from country to country, but can be close to £250 a month – so it's wise to keep them updated.
However, on a Plan 2 loan, your salary doesn't just affect how much you repay each month – it also has an impact on the rate of interest your loan accrues.
While you're in the UK, your loan gains interest at 1.5% (the current RPI figure being used) until you hit the lower income threshold of £27,295, from which point an extra percentage is added based on your income. When you hit the upper income threshold of £49,130, interest is capped at RPI plus 3%.
The same system applies while you're living abroad, with the lower figure (the maximum salary for being charged RPI only) being the same as the repayment threshold, and the larger figure (the point at which you're charged the full RPI plus 3%) being an equivalent amount of the upper threshold in your new home country.
The table below shows just a few examples of equivalent repayment thresholds in various countries around the world:
Overseas repayment thresholds – Plan 2 loans
For example, if you lived in China, you would pay back 9% of everything you earn over £21,840 (or the equivalent in China's currency, Renminbi).
The government has a full list of countries and their respective repayment thresholds (and fixed monthly repayments) on their website.
Plan 4 loans
When you're living abroad, your Plan 4 Student Loan repayments will be equivalent to what you'd pay in the UK, but converted to the currency of the country you're living in.
If and when you're living in the UK, you'll repay 9% of what you earn over £19,895 a year. And when you're abroad, you'll pay 9% of whatever you earn over the equivalent repayment threshold for that country.
You'll need to keep the Student Loans Company up to date with how much you're earning, too – if not, you'll be hit with 'fixed monthly repayment'. Exactly how much this is will vary from country to country, but you could end up paying close to £250 a month.
The interest rate on your loan doesn't change when you move abroad, so it'll still be 1.1% whether you're in the UK or elsewhere. If you're after more info on how Plan 4 Student Loan interest works, check out our guide.
This table features a handful of popular countries for British migrants, along with their respective repayment thresholds for Plan 4 loans:
Overseas repayment thresholds – Plan 4 loans
Therefore, if you lived in Australia, you would repay 9% of everything you earn over £30,000 (or the equivalent in Australian Dollars).
There's a full list of the Plan 4 repayment thresholds for each country, along with the fixed monthly repayments, on the government's website.
Postgraduate Loans in England and Wales
For postgrads who've moved abroad for more than three months, the same process applied for Plan 1, Plan 2 and Plan 4 loans is applied, whereby the SLC works out what the equivalent repayment threshold is in your new country of residence.
And again, if you don't update the SLC with your income info, you'll be hit with a 'fixed monthly repayment' which can be close to £250 a month.
The table below shows just a few examples of equivalent repayment thresholds in various countries around the world for postgraduate loans:
Overseas repayment threshold – Postgraduate Loans in England and Wales
Therefore, if you lived in Australia, you would repay 6% of everything you earn over £25,200 (or the equivalent in Australian dollars).
You can find a list of the Postgraduate Loan repayment thresholds for each country on the government's website.
What happens if your circumstances change?
When the SLC decide how much you need to repay, they'll schedule your payments for 12 months.
However, if your circumstances change – for example, if your annual pay drops to below the repayment threshold or you become unemployed – you simply need to apply for a reassessment.
Don't pay money when you don't have to, and if you overpay, make sure you apply for a refund. Since your debt will be wiped after 30 years, you should try to keep a hold of every penny you can.
What happens if you don't repay your Student Loan when abroad?
It's a common myth that you can just jet off to another country and leave all your loan troubles behind.
However, the British government claim to be taking stricter measures to catch up with graduates who aren't paying back their student debt – whatever country they're in.
Better data sharing between countries is making this easier and more effective, and the consequences can be pretty serious. The government are starting to refer defaulting students to credit agencies, implement sanctions and in some cases even prosecute.
While this might seem like a distant threat when you're in another corner of the world, it will catch up with you eventually – especially if you ever return to the UK.
Basically, it's not worth the risk.
The idea that you can move abroad to avoid repayments is just one of many myths about Student Loans – make sure you don't fall for any of the others.