Moving abroad: how repayments change
Your student loan doesn't disappear when you leave the UK. Here is everything you need to know about repaying from overseas, including the "3-month rule" and how thresholds are calculated.
The 3-Month Rule
If you leave the UK for more than 3 months, you are legally required to notify the Student Loans Company (SLC). You cannot simply "keep paying" via a UK payslip if you are no longer employed by a UK company.
You must update your employment details online and complete an Overseas Income Assessment Form (OVFA). This allows SLC to calculate your repayments based on your new salary and the cost of living in your new country.
How Repayments are Calculated
Repayments from abroad are not based on the UK threshold (e.g., £27,295 for Plan 2). Instead, SLC uses Price Level Indices (PLIs) to adjust the threshold based on the cost of living in your destination.
Countries are grouped into Bands (A to G):
- Band A: Lowest cost of living (lowest repayment threshold).
- Band G: Highest cost of living (highest repayment threshold).
You will still repay 9% (for Plan 1, 2, 4, 5) or 6% (for Postgraduate loans) of your earnings over the threshold for your country's band.
💡What happens if you don't update your details?
If you fail to provide income evidence, SLC will charge a Fixed Monthly Repayment. This is a default amount based on the country band, often set much higher than what you would pay based on your actual income.
Additionally, for Plan 2 loans, failing to respond can result in your interest rate being set to the maximum (RPI + 3%) regardless of your income. Unpaid fixed amounts accumulate as arrears, which can affect your credit rating if you return to the UK.
Actionable Advice
- Update before you go: Log in to your student finance account and update your contact details before you leave the UK.
- Keep a UK bank account: It is often easier to pay SLC via Direct Debit from a UK account. You can transfer money to this account using services like Wise or Revolut.
- Gather evidence: As soon as you start work, keep your contract and payslips. SLC will ask for these to prove your income.