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Student loan help?

Discussion in 'NQTs and new teachers' started by anon2047, Jan 29, 2012.

  1. Hi,
    I have just had my first student loan deduction, but I am sure it shouldn't start until April. Can anyone explain how it works?
    I did a 3 year full time degree which finished in 2010, PGCE 2010 - 2011 and have just started working full time on a temp contract until Summer.
    Any help gratefully appreciated!
  2. jubilee

    jubilee Star commenter

    You only pay (at 9%) on income over £15k in the tax year.
    If you had no earnings from 6th April 2011 until this employment, work out if you will receive £15k gross pay or more by the 5th April 2012.
    If you can't possibly earn that amount (and those starting out in teaching can't) you need to contact the SLC and arrange for a STOP notice to be placed with the Inland revenue (who collect the payments for the SLC.
    aS YOU WILL EARN £15K + in the 2012/13 tax year, you should start making repayments in your April 2012 pay.
    If your employment doesn't last a full tax year and you get no other work, you can reclaim any deductions made to the SLC after the end of the tax year.
    Ask if your current deductions can be rebated immediately by the Inland revenue (SLC don't get the deductions passed on until after the end of the tax year (even months after) so they can't give you back what they don't yet have evidence of you paying! You may have to wait until after April to get the unwarranted deductions rebated.
    The problem lies with your tax code. Did you complete p46 DECLARING THIS AS YOUR FIRST EMPLOYMENT OF THE TAX YEAR? That would have alerted the IR to your lack of earnings prior to this job.
    If you had other earnings or JSA, you should have submitted the P45s from those sources to your new employer, so that the IR would be able to calculate your correct tax code.
    If you have a BR tax code, you will be owed tax back as well as SLC deductions.
  3. Georgia99

    Georgia99 New commenter

    Hi Jaime, the loan comes out the April after you graduate from your degree if you are earning 15k+. If you continue on to a PGCE or take any subsequent higher education courses, this rule does not apply for the second course and they therefore start taking payments from your wages as soon as they can.
    Like jubilee said, if you haven't earned 15k by April, you can actually ask the student loan company for a refund of your deductions.
    My loan deduction started coming out this month for the first time too.
  4. modgepodge

    modgepodge Established commenter

    Is it actually worth claiming back money you've paid to the SLC if you shouldn't have paid it? I've never bothered....it's not like tax where if you overpay it's your money and you are owed it, at the end of the day you're paying off a debt and by paying it back sooner you end up owing less interest so clear the debt quicker?
    Or perhaps I've missed a trick here?
    SLC deducted £49 out of my pay this month. Technically I shouldn't be paying anything back but it's so little compared to tax and NI, and I'll have to pay it back sooner or later, it just doesn't seem worth it?
  5. jubilee

    jubilee Star commenter

    True, but ...
    the interest rate on the SLC debt is usually less than you could get after tax if the money went into a savings account instead.
    There has been one year recently when the interest rate was 0% on the loans! I tried in vain to persuade my sister to 'allow' her daughter to take out a student loan instead of my sister funding her entire time at university. I explained that she could take out the maximum loan and put it in a fixed ISA for 3 years, then 2 years, then one year and earn interest on the money.
    The entire loan would then be available for buying a car or putting down a deposit ona house, meaning that less would need to be borrowed as a post-graduate on a mortgage etc.
    Something else to consider is that some graduates don't end up in secure employment or take a career break to bring up a family. If the loan is not paid off after a certain number of years, perhaps because the graduate combines p/t work with parenthood and nevers earns the salary that triggers repayments, the debt is eventually written off.
    So, why accelerate repayments when you can make the money work for you by only paying the absolute minimum?

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