Pre-1998 'mortgage style' student loans – should I repay early?

This is known as the repayment threshold. Once you reach this threshold, you need to contact the debt management company that administers your loan to set up a direct debit, or pay by bank transfer, card or cheque. Repayments on these old style fixed term student loans won't get deducted from your pay like current student loans – the onus is all on you to set up repayments.

If you do notice student loan deductions on your payslip, and you don't have any other student finance, let your employer know as soon as possible, as it's possible they've wrongly put you on a plan 1 or plan 2 repayment scheme. Then contact HMRC to get the money refunded to you and pay it directly to your loan company. Otherwise you won't actually be paying off your student loan.

Here are the details for the three companies now collecting the loans:

• Thesis Servicing: 03330 045 045, or if you’re calling from overseas +44 292 080 8684
• Honours Student Loans: 0333 003 7257, or if you’re calling from overseas +44 333 003 7237
• Erudio Student Loans: 0333 003 7188, or if you’re calling from overseas +44 141 278 6114

You should have received a letter explaining who your loan was taken on by, but if you can't find it and are unsure, at worst you'll need to call all three and find out who is collecting your loan.

If your income drops below the repayment threshold you can still choose to make repayments (if you wish) and you won't be penalised for doing so. However, realistically it's more likely you'll struggle to pay and need to 'defer' payments – ie, pay later.

If this applies to you, you can defer payments and not pay off your loan for 12 months at a time. You'll need to reapply for deferment every year if you still can't afford to pay, it doesn't automatically roll over to the next year. In order to defer payments you'll need to write to the debt management company administering your loan (it doesn't happen automatically just because your salary has dropped for instance).

You'll need to provide certain evidence, such as payslips or benefits letters, and you should continue to make repayments until you receive confirmation of your deferment. If you already pay by direct debit, this will automatically stop once the deferment is granted.

You're still charged interest on your outstanding balance during deferment. See Erudio Student Loans, Thesis Servicing or Honours Student Loans for further information on how to defer.

Still struggling? Get free debt help.