To ask the Secretary of State for Education, if he will cap the income repayment threshold for student loans in the aftermath of the covid-19 outbreak.
27 January 2021
There are no current plans to cap the income repayment threshold for student loans.
The repayment of student loans is governed by the Education (Student Loans) (Repayment) Regulations 2009 (as amended).
The current system protects borrowers if they see a reduction in their income. Repayments are made based on a borrower’s monthly or weekly income, not the interest rate or amount borrowed, and no repayments are made for earnings below the repayment thresholds. The repayment threshold is adjusted annually in line with average earnings.
Repayments are calculated as a fixed percentage of earnings above the relevant repayment threshold - if income drops, so do repayments made. Any outstanding debt is written off at the end of the loan term with no detriment to the borrower.
If, at the end of the year, the borrower’s total income is below the relevant annual threshold, they may reclaim any repayments from the Student Loans Company made during that year.