University is an exciting, but expensive, experience. Unfortunately, student loan debt stays with you for a significant number of years after you graduate. But what happens if things go wrong, or you can’t make the repayments expected of you? If you’ve found yourself in this position, keep reading for our advice on what to do if you are in arrears with your student loan debt.
What Does ‘in Arrears’ Mean?
If your student loan is ‘in arrears’, this means you are behind on paying money that is owed to the Student Loans Company (SLC). This can lead to them taking action.
This action can include:
- Passing the debt on to a debt collection agency (it’s important to remember that debt collectors are not bailiffs and do not have the power to enter your home).
- Applying to recover the debt via a County Court Judgement (CCJ). If they do this, your credit rating will be affected, and further enforcement may be taken, such as the instruction of bailiffs and/or a charging order against your home.
Additionally, arrears can make it harder to get credit, such as a mortgage or credit card, if they have been reported on your credit file. You can check what is on your file by contacting a credit reference agency, and, in some cases, you can ask them to make a note explaining any context behind why you are in debt.
How Does Student Loan Debt Accrue Arrears?
First of all, how does student loan debt accrue arrears? This situation can occur in any of the following circumstances:
- You forget to defer a payment, or you miss one or more of your required payments according to your repayment plan.
- You are living/working overseas and have changed jobs, but haven’t updated your employment details in your online Student Finance England (SFE) account. If this is the case, you will need to make a fixed monthly repayment – this can be as much as £565.60. Arrears will continue to build up for every month you don’t make your repayment.
- You are living/working overseas and have updated your employment details, but you have missed one or more required repayments according to your repayment plan.
- You are self-employed and have not paid the correct amount outlined in your self-assessment.
These arrears are part of your overall balance, which has become overdue; they are not an additional charge. However, if you have left the UK for more than 3 months but have not told the SLC, you’ll need to pay arrears back on top of your monthly repayments.
What To Do If You Are in Arrears
If you’ve found yourself in this position, here are a few things you can do to solve the problem.
Contact the Student Loans Company (SLC)
You should let the SLC know straight away, as you will need to make an arrangement with them directly to repay your arrears.
Even if you’ve returned to the UK and are making repayments to your student loan at the same time you pay tax and National Insurance, these repayments will not go towards any arrears. Therefore, you will also need to arrange repayments with the SLC.
You can do this by calling the SLC Arrears Enquiries Line on +44 141 243 3970.
Apply to Defer Your Student Loan
Another option is applying to defer your student loan, which postpones your repayments for 12 months, as long as you earn under the government’s threshold. However, you will only be able to do this if you have an ‘old’ or ‘mortgage-style’ student loan (one that was taken out between 1990-1997).
If your gross income (the amount you earn before tax and National Insurance) is £3,295.25 or less per month (equivalent to £39,543 per year), you may be eligible for deferment. These rules are in place until 31st August 2025.
You need to complete and return an application form to apply for deferment. The application form you complete and where you send this back to will depend on which company is dealing with your student loan. In England, this will be one of the following companies:
Speak to a Debt Adviser
To help you manage your debt and prevent issues like arrears arising in the future, one of the best things you can do is speak to a debt adviser, such as ourselves.
At Angel Advance, we’re proud to have helped over 48,000 people discover the right debt solution for their unique situations, including Debt Management Plans (DMPs), Individual Voluntary Arrangements (IVAs), Debt Relief Orders (DROs), Partial Settlements and Bankruptcy. We also offer Debt Solutions for Scottish Residents.
If all you need is some debt advice without applying for a solution, this won’t affect your credit score.
Manage Student Loan Debt with Angel Advance
The average amount of student debt in the UK during the 2022-23 academic year equated to approximately £45,600. It’s no surprise that daunting amounts like that can lead to money worries, or in some cases, financial hardship. But what can also be daunting is taking that leap to reach out for help. That’s why we’ve made it possible to get debt advice online.
If you’re worried about your student loan repayments, or you’re in arrears and are struggling to pay the SLC back, contact us to get free*, confidential debt advice. Or, if you’d prefer to receive debt advice without a phone call, our free online tool is available to use any time, day or night.
*Our advice is free, but if you sign up for a debt solution, a fee will apply for some solutions.
