UK Student Finance
An A-Z of Student Finance

Unable To Repay Your Student Loan?

If you are earning above the student loan repayment threshold but have trouble meeting your repayments, it is important that you contact the Student Loans Company. Under the terms of your student loan credit agreement, you are expected either to make regular repayments, or to defer repayment if your income falls under a certain level.

If you encounter financial problems and cannot defer repayment or meet your monthly repayment amount, you must let the Student Loans Company know as soon as possible. They will do as much as possible to advise and assist you.

How can the Student Loans Company Help?

Once you have started repayment of your student loan, an amount will be due each month.

If you cannot defer repayment (for example if your income is above the deferment threshold), you should contact the Student Loans Company to discuss your situation. It is important that your monthly repayment amount is met in order to prevent missed repayments on your account (also known as "arrears").

The Student Loans Company may be able to help you by arranging a reduced repayment schedule with them and could ask you to discuss reduced repayment plans with your other creditors.

Bear in mind that if you do arrange for reduced repayments, the full monthly repayment amount of your student loan will still fall due, and part of it will remain unpaid.

You will need to repay these outstanding amounts – the Student Loans Company will work with you to arrange the best way in which to do this.

Can You Stop Making Repayments?

If you do not make repayments, the Student Loans Company will make every effort to agree a suitable arrangement to bring your repayments up to date before taking debt recovery action.

If you miss one repayment, the Student Loans Company will send you a letter. If you get this letter, don’t worry – just give them a call to discuss your options.

If you still do not respond, they will make further attempts to contact you by telephone and letter.

If you do not respond to this, or the Student Loans Company cannot contact you, it is likely that they will take further action to recover any outstanding arrears. This can involve the use of a debt collection agency, who may call at your home.

Finally, legal action may be taken against you, which could affect your credit rating or lead to money being deducted from your earnings before they are paid to you (known as an 'attachment of earnings').

The best course of action is to answer all correspondence from the Student Loans Company, and contact them as soon as possible if you have missed a repayment, or are suffering financial hardship.

Additional Charges

If debt recovery action is necessary on your loan account, your credit agreement gives the Student Loans Company the right to apply charges to your account in order to cover any costs that arise.

You may be charged the following:

·        for a letter advising you that there are overdue repayments on your loan account (sent to you “as a result of your breach of the Credit Agreement”): £20

·        if the Student Loans Company attempts to collect a repayment by direct debit and the bank rejects this attempt (a “recalled or dishonoured payment”): £15

·        third party charges (for example, debt collection by external agencies, tracing fees etc): at cost

·        if legal action is taken to enforce the credit agreement: all costs and expenses incurred
 

 

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