What happens with my student loan if I go abroad? If you are planning to travel abroad or if you have already travelled, you need to organize how to repay student loan while abroad UK. The reason why this question is important is that, when you travel abroad, you are no longer within the UK tax system. While in the UK, HM Revenue & Customs (HMRC) is responsible for your student repayment. But when you travel, Student Loans Company takes over this role.
In this article, we are going to provide you with ways of repaying living abroad student loan UK. Follow the following steps for UK student loan repayment overseas.
1. Notify the Student Loan Company Before Travelling
If you are planning to travel abroad for more than three months, then you need to contact the Student Loans Company overseas before travelling.
2. Fill in the Overseas Income Assessment Form
You will need to fill in an “Overseas Income Assessment Form” before travelling. Then, the company will send you a letter providing you with details like:
- Confirmation of whether your repayments are due
- Arrange for direct repayments
- Provide you with the monthly amount you are required to pay
Details to Write in Overseas Income Assessment Form
The Overseas Income Assessment Form helps you provide details of your individual circumstances. You need to provide the following details:
- Specify the currency of your income abroad
- Send evidence to SLC of your earnings like a copy of your contract
The documents you need to provide usually depend on whether you are employed, self-employed, unemployed, or if you are a student.
Employed: You need to provide:
- Three months’ pay slips
- Employment contract signed by your employer
Self-employed: You need to provide
- Financial accounts like invoices
- A letter from your accountant indicating your annual gross income
Unemployed: You need to provide:
- Evidence of benefits you have received in the last year
However, during your first year of employment, you don’t have to provide all these details. Instead, you can provide copies of your bank statements for the last 3 months and a Third Party Declaration in case someone else is supporting you while abroad.
3. Keep SLC Updated
Once you have provided all the details and SLC is satisfied, the system will be deducting money from your bank account every month. However, SLC will be sending frequent reminders of your student loan balance. They may also ask you to confirm your income every year. In case your income changes, you can update your situation.
Also read: Money traps to avoid in your 20s.
How to Pay Student Loan while Abroad UK
Once SLC informs you how much you are supposed to pay, you can make payments through:
- Online bank account: You can set up a one-off or recurring card payments or use online bank like Wise. Alternatively, you can set up a direct debit.
- International Bank Transfer (IBAN): You can transfer money from a non-UK bank account using the following details:
NatWest Government Banking Team
NatWest Customer Service Centre
Make sure to use customer reference number or grant reference number when making payments.
UK Student Loan Repayment Threshold Overseas
The amount of student loan you will be repaying depends on which plan your loan is and when you started university, your level of student and where you lived outside of term time. You can check which plan your loan is here.
If you are a UK resident, you will be required to start repaying your student loan if your earnings exceed the minimum student loan repayment threshold. You are required to repay nine percent of your earnings over the threshold. You can follow the following links to see the overseas earnings threshold depending on which plan your loan is:
- Overseas earnings threshold for Plan 1 student loans
- Overseas earnings threshold for Plan 2 student loans
- Overseas earnings threshold for Plan 4 student loans
- Postgraduate loan repayments
What Happens When I Return to the UK?
If you are returning to the UK for less than three months, you will continue to be treated as a foreigner. If you are returning for more than 3 months, you need to notify the SLC. It is because you need to start making Pay As You Earn (PAYE) repayments again. The SLC will revert your loan repayment to that of a UK taxpayer.
Summary of UK Student Loan Repayment Living Abroad
You can repay student loan abroad if your income exceeds the minimum student loan threshold. You can pay your loan directly from the salary you earn overseas through your online bank account or IBAN. If you have paid almost full of the amount of your student loan, you can make the final repayment through a direct debit instead of it being deducted from your salary. This helps you avoid paying more than you owe.