There are two things that the Global Payroll Association wants to point out regarding Student Loans that have been taken out by Scottish borrowers. A Scottish borrower is one that generally was resident in Scotland at the time that they took out their student loan and studies in Scotland.
Firstly it is worth pointing out that all student loans in Scotland are issued under plan 1. Plan 2 and postgraduate loans only apply to borrowers in England and Wales. An independent review of support for students in Scotland reported in November 2017 and contained a number of recommendations, two of which we want to point out:
- The write-off period for loans from Scottish borrowers should be reduced from 35 years to 30 years and
- The repayment threshold should increase to £22,000 from 2021
The write-off period
The Education (Student Loans) (Miscellaneous Amendments) (Scotland) Regulations 2018 have made good on the first recommendation (this was also confirmed by the Minister for Further and Higher Education in July 2018).
From the 4th of December 2018, student loans for Scottish borrowers are written off after 30 years rather than 35. This means that:
- If the student loan was taken between 1998 and before September 2006 then it is written off after 30 years or if the person reaches the age of 65 (whichever comes first)
- If the student loan was taken from September 2006 then it is written off after 30 years
The increased threshold
We await further information on this as things have changed since the November 2017 recommendations. The July 2018 announcement by the minister said the threshold would raise to £25,000 from April 2021. What this actually means is that the Scottish government’s intention is to match the plan 1 threshold for Scottish borrowers to the plan 2 threshold that applies for English and Welsh borrowers (which was £25,000 at the time).
This will mean a new plan type for payroll professionals to administer, software to calculate and HMRC to instruct. No further information is available at the moment but the Global Payroll Association advises that this should be on the “watch list” for the next year.
There are two things that the Global Payroll Association wants to point out regarding Student Loans that have been taken out by Scottish borrowers. A Scottish borrower is one that generally was resident in Scotland at the time that they took out their student loan and studies in Scotland.
Firstly it is worth pointing out that all student loans in Scotland are issued under plan 1. Plan 2 and postgraduate loans only apply to borrowers in England and Wales. An independent review of support for students in Scotland reported in November 2017 and contained a number of recommendations, two of which we want to point out:
- The write-off period for loans from Scottish borrowers should be reduced from 35 years to 30 years and
- The repayment threshold should increase to £22,000 from 2021
The write-off period
The Education (Student Loans) (Miscellaneous Amendments) (Scotland) Regulations 2018 have made good on the first recommendation (this was also confirmed by the Minister for Further and Higher Education in July 2018).
From the 4th of December 2018, student loans for Scottish borrowers are written off after 30 years rather than 35. This means that:
- If the student loan was taken between 1998 and before September 2006 then it is written off after 30 years or if the person reaches the age of 65 (whichever comes first)
- If the student loan was taken from September 2006 then it is written off after 30 years
The increased threshold
We await further information on this as things have changed since the November 2017 recommendations. The July 2018 announcement by the minister said the threshold would raise to £25,000 from April 2021. What this actually means is that the Scottish government’s intention is to match the plan 1 threshold for Scottish borrowers to the plan 2 threshold that applies for English and Welsh borrowers (which was £25,000 at the time).
This will mean a new plan type for payroll professionals to administer, software to calculate and HMRC to instruct. No further information is available at the moment but the Global Payroll Association advises that this should be on the “watch list” for the next year.