Student Loan system overhaul to benefit millions of graduates

April 2020 sees the third consecutive annual increase in the repayment threshold to £26,575 (for plan type 2 loans). The older Plan type 1 threshold rises to £19,390.Under the student loan s plan, borrowers contribute an amount based on their income once they reach the relevant salary threshold.

A new online repayment service will go live in 2020 and will allow graduates to see and manage more up to date information about their student loan balance.

‘Millions of graduates will be able to bin their paper statements and access their student loan account online as part of a major revamp to the system’, Education Secretary Gavin Williamson announced on Monday 30th December.

This new service is part of improvements to modernise the Student Loans Company (SLC) repayment system and provides option replace the current annual paper statements.

Universities Minister Chris Skidmore also suggesting that to prevent over-paying towards the end of their loan, graduates to switch to direct debit rather than automatic deductions from their salary.

It is easy for graduates and their employers to incorrectly operate student loans or miss them. The New Starter checklist declarations are confusing and easy to incorrectly answer the relevant questions.

More regular feeds of student loan payments via Real Time Information (RTI) Full Payment Submissions (FPS) via HMRC from the employer mean that the new online accounts will in future contain more up to date information.

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