The Sunday Times reported today that a little-known rule of student loans repayment means that graduates who work abroad could end up re-paying their loan at a minimum yearly salary of just £4,200.
Much to the dismay of many, moving abroad will not omit you from paying back student loans. The myth—that after 3 years of working in a foreign country your debt is wiped clear—is nothing more than just a myth.
Now, however, there’s the added complication that the country you end up in dictates how much you have to repay each month.
In the UK, the threshold is £21,000, at which you start paying back 9% of your earnings to the Student Loans Company (SLC).
This figure, however, fluctuates massively from country to country. Another piece of bad news for students: you are liable for having to cover the currency exchange cost as well.
The Sunday Times reported that graduates must start paying back their loans once they reach the equivalent annual salary of £16,800 in the USA, Germany and Japan, £8,400 in China, and £4,200 in India.
This applies to all graduates who work for longer than 3 months, even if it’s just a secondment.
It is your responsibility to inform SLC that you are working abroad by completing an SLC overseas income assessment before you leave.
If you fail to do this, you can face fees of up to £150 on top of the debt that you owe.
Rosie Howarth, a graduate who worked abroad, told The New Statesman that “since her return to the UK, she has been asked for £2,500 in arrears which she says she can’t pay.”
With the drop in pound since the Brexit vote last June, this year’s graduates who choose to work abroad will have to pay back even earlier, since the pound is down by 11% against the Dollar and 9% against the Euro.
So if you’re planning to work abroad once you’ve graduated, make sure you bear this in mind.
It could save you a lot of stress and hassle in the long run.
By Holly Smith