Student loan repayments after state pension age
Discussion
I have a plan 2 student loan, for a diploma course that started 8 years ago.
I get my state pension next month.
I have not made any repayments so far, as my income has been too low - £12k a year from company DB pensions, and around £10k profit from self employment (sole trader).
When I get my state pension, I will be carrying on with self employment. My total income will be over the £27,295 threshold, probably around £32k.
I thought that I would have to start making repayments (9% of the amount over the threshold), but looking at the government website, I'm not sure.
It says that if you have 2 jobs and a total income over the threshold, you only make repayments if an individual job pays over the threshold. £40k income from 2 jobs, neither of which pay more than £27,295, means no repayments.
I can find no mention of pension income, but it looks like I shouldn't have to pay with 3 income streams of £10 to 12k each?
I get my state pension next month.
I have not made any repayments so far, as my income has been too low - £12k a year from company DB pensions, and around £10k profit from self employment (sole trader).
When I get my state pension, I will be carrying on with self employment. My total income will be over the £27,295 threshold, probably around £32k.
I thought that I would have to start making repayments (9% of the amount over the threshold), but looking at the government website, I'm not sure.
It says that if you have 2 jobs and a total income over the threshold, you only make repayments if an individual job pays over the threshold. £40k income from 2 jobs, neither of which pay more than £27,295, means no repayments.
I can find no mention of pension income, but it looks like I shouldn't have to pay with 3 income streams of £10 to 12k each?
I've just looked at the government's website, and the thing is, they use the word "income" everywhere, without defining the source of said income.
But; it says if you stop working, then you stop paying. Which implies to me, they mean "earned income", ie from employment. In thar case, income from a pension does not count.
Also, it refers to income from multiple jobs (as you have noted) and it says the threshold is applied individually and not to the total.
So the way I read it as that you'd need 1 job paying over the threshold before you have to make repayments. In your, you don't meet that criteria, so you are OK.
Well, that's how I read it anyway.
But; it says if you stop working, then you stop paying. Which implies to me, they mean "earned income", ie from employment. In thar case, income from a pension does not count.
Also, it refers to income from multiple jobs (as you have noted) and it says the threshold is applied individually and not to the total.
So the way I read it as that you'd need 1 job paying over the threshold before you have to make repayments. In your, you don't meet that criteria, so you are OK.
Well, that's how I read it anyway.
The government's website is lacking in clarity but this link may well help you.
https://www.whatdotheyknow.com/request/pension_inc...
It looks like the Student Loans Company say that it only refers to earned income (i.e. that which is subject to class 1 NIC's).
It's an interesting response as when you reach state pension age your income is no longer subject to Class 1 NIC so based on their response there's a good argument that says you'll never have to pay off the loan regardless of your income!
Quote from the link:
Student loan deductions are taken from any income subject to (secondary) Class 1 National Insurance Contributions (“NICs”) (this is commonly known as “NICable income”) under regulations 41 and 45(1) of the Education (Student Support)(Repayment) Regulations 2009 (as amended).
https://www.whatdotheyknow.com/request/pension_inc...
It looks like the Student Loans Company say that it only refers to earned income (i.e. that which is subject to class 1 NIC's).
It's an interesting response as when you reach state pension age your income is no longer subject to Class 1 NIC so based on their response there's a good argument that says you'll never have to pay off the loan regardless of your income!
Quote from the link:
Student loan deductions are taken from any income subject to (secondary) Class 1 National Insurance Contributions (“NICs”) (this is commonly known as “NICable income”) under regulations 41 and 45(1) of the Education (Student Support)(Repayment) Regulations 2009 (as amended).
Seems to be a very grey area then, open to interpretation by the student loan company and HMRC.
When I took out the loan, I was under the impression that it would be cancelled at state pension age. I think that was the case for "plan 1" loans. It wasn't at all clear at the time, but I later discovered - after a mix-up where they tried to make me pay for someone else's student loan because I have the same name and was born in the same area around the same time - that I had a "plan 2" loan which wasn't written off upon retirement.
Getting them to agree that the loan from 20+ years ago was nothing to do with me took a couple of years. For some reason, they didn't take NI numbers back in those days when handing out student loans. I had to prove that I was living and working full-time 300 miles away from the college that this other person was attending!
I guess I will have to wait and see what happens when I do my self-assessment for 23/24. If they take payments, I can try an appeal, or just give in and pay the loan off. It's only a few grand (2 year evening class course).
When I took out the loan, I was under the impression that it would be cancelled at state pension age. I think that was the case for "plan 1" loans. It wasn't at all clear at the time, but I later discovered - after a mix-up where they tried to make me pay for someone else's student loan because I have the same name and was born in the same area around the same time - that I had a "plan 2" loan which wasn't written off upon retirement.
Getting them to agree that the loan from 20+ years ago was nothing to do with me took a couple of years. For some reason, they didn't take NI numbers back in those days when handing out student loans. I had to prove that I was living and working full-time 300 miles away from the college that this other person was attending!
I guess I will have to wait and see what happens when I do my self-assessment for 23/24. If they take payments, I can try an appeal, or just give in and pay the loan off. It's only a few grand (2 year evening class course).
It was a 2 year diploma (level 4) course in counselling. I paid for the level 2 (6 month) and level 3 (1 year) courses up front. The college running the level 4 course told me I should get a 24+ learner loan to pay for it. I had no idea that loans were available for people my age.
I mostly took the course as as a way of figuring out my own issues (levels 2 and 3 included a lot of group work and 1 to 1 therapy), and then to give something back to others at level 4. Part of the diploma course involved getting in at least 100 hours of unpaid client work. I did this with an addiction charity, helping their clients with their underlying mental health issues.
NHS mental health support is in a shocking state. Charities are the only way for many people to get help. Without volunteers and trainees, the system would collapse.
I mostly took the course as as a way of figuring out my own issues (levels 2 and 3 included a lot of group work and 1 to 1 therapy), and then to give something back to others at level 4. Part of the diploma course involved getting in at least 100 hours of unpaid client work. I did this with an addiction charity, helping their clients with their underlying mental health issues.
NHS mental health support is in a shocking state. Charities are the only way for many people to get help. Without volunteers and trainees, the system would collapse.
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