The Independent Review of Financial Support for Students in Scotland Consultation ran from 30 June to 31 August 2017.
It reported on 20 November 2017 and contained two recommendations in terms of Student Loans for Scottish borrowers:
- A shortened write-off period for unrepaid Student Loans from 35 to 30 years and
- An increase to the repayment threshold (Plan 1) from 2021
With regards to the repayment period, Shirley-Anne Somerville MSP, Minister for Further and Higher Education, confirmed that the repayment terms in Scotland would reduce to 30 years by the end of 2018.
Note that this applies to post-September 1998 Loans only. Pre September 1998 ‘mortgage’ type Loans have been sold to 3 different private companies and ex-students with this type of Loan should approach the relevant holder of the outstanding debt.
The Repayment Period
Prior to 2018 legislation, Student Loans for Scottish borrowers were written off if unpaid depending on when the ex-student started their studies:
- If between September 1998 and the end of August 2006, the Loan is wiped clear at the age of 65
- From September 2006, the Loan is wiped clear 35 years following the date on which the ex-student became eligible to repay it (the April following completion of studies)
The Education (Student Loans) (Miscellaneous Amendments) (Scotland) Regulations 2018 have changed this, making good on the recommendation and commitment from the Minister. From 04 December 2018 Student Loans for Scottish borrowers are written off if unpaid as follows:
- If taken out between September 1998 and the end of August 2006, the Loan is wiped clear at the age of 65 or 30 years following eligibility to start repaying, whichever is the soonest
- If taken out September 2006, the Loan is wiped clear 30 years following the date on which the ex-student became eligible to repay it
Whilst ceasing Student Loan deductions is totally out of the hands of employers, I believe that it is good for them to have this information. Hence the reason for publishing. It is also good to see that the maximum repayment periods for Scottish borrowers are no longer the highest in the United Kingdom.
Any news on the repayment threshold?
Of more interest, perhaps, to employers and software developers is the increase to the repayment threshold for Scottish borrowers. The above report said that this should increase to £22,000 as did the SNP’s Programme for Government 2017/18 published in September 2017 which committed to raise the Plan 1 threshold to £22,000 by the end of the Parliamentary term in 2021.
On 09 June 2018, First Minister Nicola Sturgeon announced that this would increase to £25,000 instead, effective April 2021. This was confirmed by Shirley-Anne Somerville in the 06 July 2018 announcement
However, I understand that legislation will be put in place to match the Scottish Plan 1 threshold to the English and Welsh Plan 2 threshold, whatever that happens to be in 2021. This will mean the creation of a new Plan type and the need for HMRC to identify Scottish borrowers.
Watch this space for that one…..