Graduates who work overseas are being warned that they face payback rates of up to £350 a month and fines of up to £150 if they neglect to inform the Student Loans Company of their whereabouts (telegraph.co.Uk)
With one graduate in every four unable to get a job, moving abroad to find work makes sense. But graduates who move abroad or go travelling for over three months without notifying the Student Loans Company (SLC) of their income, or lack of it, could find themselves being put on an automatic repayment schedule for their loans.
The SLC said that more than 13,213 students have been put onto default monthly payments in the past 12 months, with around 1,500 graduates tracked down via tracing agents.
The level of default payment is determined by the country of residence and is based on twice that country’s average salary. This could mean £344 per month leaving their bank account by direct debit if they move to Norway or Denmark.
Those living undeclared in the Netherlands or New Zealand are looking at a deduction of £246 per month, while US and Portugal residents will see £196 extracted. This compares to the £37.50 that UK graduates earning £20,000 would typically be required to pay back each month.
The graduate will also be liable to pay any conversion costs for their country of residence’s currency to the pound.
“Graduates believe that living abroad for a certain number of years, usually six, will result in student loans being cancelled altogether,” said David Malcolm, head of social policy at the National Union of Students.
The regulations on repaying loans for students moving abroad are buried on page 17 of the Student Loans Company (SLC) policy booklet.
“I had no idea that I needed to inform the SLC that I was moving abroad,” said Durham University languages graduate Ed Mason, who moved to China for a year to teach English. “If modern languages students, who are more likely to move abroad than most, don’t talk about it, you have to wonder how well publicised it is.”
“When I found out I contacted the SLC straight away.”
University leavers who choose to move abroad for more than three months without informing the SLC could also be looking at fines of up to £150 on top of their debts.
The student loans guide states: “If you do not pay UK tax because you live and work abroad for a non-UK employer, you must tell us, and make arrangements to make your repayments direct. If you don’t, we can charge penalties on your loan and where necessary, ask you to repay the full amount of loan, plus interest and penalties in one lump sum.”
The SLC also says it will also demand reimbursement for ”the costs of any trace agents employed” to find them, adding to the bill.
To avoid these punitive expenses overseas graduates need to complete an SLC overseas income assessment form before they leave. It asks for employment and income details in their new country, as well as evidence of how they intend to support themselves financially.
Mr Malcolm said graduates who go travelling can be caught out if they don’t have paperwork to prove how they sustained themselves. ”It is important to prove that you didn’t receive earnings, or only very low earnings, during your time abroad.”
Once details have been given, former students who are earning will be sent a monthly repayment schedule, provided their salary is over the threshold income in their new country.
This wage limit, based on global living standards, is a further source of potential confusion because it varies across the world, so graduates must check their relevant threshold before they leave.
For example, if British graduates move to China or India, they will be responsible for starting to repay their loans once they earn more than the equivalent of £6,000, compared with the £15,000 threshold in Britain.
Other limits are £12,000 for the US, £9,000 for Brazil and Russia, and £3,000 for many African countries. For full details, visit the ”Thresholds for Overseas Customers” pages at http://www.studentloanrepayment.co.uk.
Once salaries top these amounts, graduates will start repayments at the standard rate of 9pc of the income they earn over the threshold.
Rahul Mansigani, president of the Cambridge Students’ Union, said: “Students are unaware of the precise details of student loan repayment, especially when considering working abroad, which is becoming an increasingly attractive prospect in the current economic climate.”
To avoid adding to their debt, graduates are advised to read the terms and conditions carefully and to advise the SLC of their movements