The Government today formally restarted the process of selling off English student loans, after a delay of several months due to the general election. Here's what you need to know if your loan's being sold off.
The loans being sold are those taken out by English students who started uni in or after 1998 and started repaying between April 2002 and April 2006 (you start making repayments the year after you graduate, if you earn more than the repayment threshold). The Government hopes to complete the sale by the end of the year, but we don't yet know who it will be to.
Many are likely to be concerned given what happened when loans taken out by students who began courses between 1990 and 1998 were sold off. Problems with the student loans administrator Erudio included a failure to provide deferment application forms on time, money being mistakenly taken out of accounts and graduates being sent letters quoting defunct regulations.
But with this sale, the Government's insisted there will be no impact on graduates, and no change to the way or amount you repay. For more on how student repayments work, see our Should I repay my student loan? guide.
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'There will be no change whatsoever to how you repay'
Martin Lewis, founder of MoneySavingExpert.com, said: "When they sold pre-1998 student loans the Government promised no change to terms and conditions. That sounded innocuous but caused headache and worry for many.
"While the main terms stayed the same, the way the system was operated changed. It was no longer the Student Loans Company that people dealt with, but loan purchaser Erudio. Loans started to appear on their credit files, deferment forms got radically changed, and people felt it was intrusive. Plus a host of collection errors hit the system.
"I've lobbied hard about these – giving evidence to Parliament, and in discussions with ministers – and this time I've been given a personal assurance that not only won't the terms change, but there will be no change whatsoever to the way that graduates and former students repay their loans.
Who will see their loans sold off?
Students who lived in England when they applied, were on 'income-contingent Plan 1' loans – ie, started uni between 1998 and 2011 – and began repaying their loans between 2002 and 2006 are the ones affected by today's announcement.
What counts is when you actually started repaying – so if you didn't start repaying until after April 2006 because you were below the income threshold or for any other reason, you're not affected. Scottish, Welsh and Northern Irish loans aren't affected either.
When it first announced the sale earlier this year, the Department for Education said it was "expected to be the first of a planned four-year programme of sales of loans issued before 2012", so other sales could follow. However, there was no update today on when or if these loans will be sold.
Will I see any change to the way I repay my loan?
In a word, no – the Department for Education insists if your loan is sold you won't see any changes to the way you repay it, regardless of whether you pay via payroll or are self-employed.
Regardless of who your student loans is sold to, the Student Loans Company (SLC) will continue to administer it and send you annual statements as usual.
If I have a problem or complaint about my loan, who should I contact?
The SLC will remain your contact for all issues relating to your loan – including repayment issues, problems and complaints. You won't have any direct contact with whoever purchases your loan.
Will this affect my credit reports?
No. There will be no change to the fact that student loan repayments won't go on your credit file.
Those buying the loans also won't have access to your personal information.
Will this lead to a change in my repayment terms?
Again, no – whoever buys your loan won't have the ability to change repayment terms.
You will continue to pay 9% of anything you earn over the income threshold, which is £17,775 before tax per year.
If you started university between 1998 and 2005 your loan will be wiped when you turn 65.