You might be used to how student loan repayments work in the UK, but what changes when you move overseas? Many UK students borrow money through the Student Loan Plan 2 to cover university costs. A lot of students wonder: Do I still have to repay my loan if I move overseas?

The short answer is yes.

But here’s the catch—your repayments won’t be taken automatically anymore. You’ll need to stay on top of it yourself to avoid unexpected charges or penalties.

If you’re residing abroad with a Student Loan Plan 2, it’s crucial to inform the Student Loans Company (SLC). They’ll ask for proof of your income so they can work out how much you should repay.

How overseas repayments work for student loan plan 2

Paying back student loans isn’t the same everywhere—it really depends on which country you’re in. For Student Loan Plan 2 in the UK, you only start paying it back once you’re earning over a certain amount. If you’re making less than that threshold, you don’t have to pay a thing. And the more you earn, the more you pay each month—simple as that.

The income threshold is different depending on where you live. In countries like the USA or Australia, it’s usually higher, while in places with a lower cost of living, the threshold tends to be lower too. At the end of the day, it’s the UK government that sets the rules for how Student Loan Plan 2 works.

The Price Level Index (PLI) compares the wide range of prices in different countries, like the prices of food, housing, and transportation, so that a common threshold level can be set. The repayment thresholds for each country are set annually on April 6.

You still have to repay your student loan plan 2

Even if you no longer live in the UK, you still have to make your Student Loan Plan 2 installments. Moving overseas does not eliminate your student loan debt.

The loan is typically written off under Student Loan Plan 2, 30 years after you first qualify for repayment. This implies that the remaining amount gets canceled if you haven’t paid it in full before then. However, if your income exceeds the threshold while you are earning, you still have to repay.

The most recent list is available on the SLC or GOV.UK websites. Search for “Repayment thresholds overseas.”

To find out how much you owe, make sure to check this every year. You could develop debt if you don’t stay in contact with the SLC. Penalties could also be applied to you. Plan 2 of the Student Loan is a legitimate loan. Even if you live far away, you still need to take it seriously.

Why oyu must complete the overseas income assessment form for student loan plan 2

You must have to complete an “Overseas Income Assessment Form” when you leave the UK. The SLC is the source of this form. The SLC uses this form to determine how much you will have to return.

Each year, you have to update them. Additionally, you need to submit evidence of your income. These could include bank statements, paychecks, or employment contracts.

The SLC can figure out your income if you don’t submit this form. We refer to this as a “default” repayment. Sometimes, the default quantity is high. It can cost more than £300 a month. This is why you must fill in the form on time.

How much you repay on student loan plan 2 while overseas

The amount you earn beyond the threshold determines how much you must repay on your Student Loan Plan 2. You must repay 9% of your income above the average threshold.

Example:

• Threshold: £20,000
• Your income: £25,000
• Amount over the threshold: £5,000
• Repayment: 9% of £5,000 = £450 per year
• Monthly payment: Around £37.50

That’s how Student Loan Plan 2 works when you’re living abroad. You must inform the Student Loans Company (SLC) of any changes in your income during the year. This allows your repayments to be adjusted fairly.

If your income goes up, your repayments will increase. If your income drops, your repayments will go down, so you won’t overpay.

How income is calculated if you’re paid more than monthly

Some countries pay their workers more than 12 times a year. In this case, your average monthly wage will be calculated using the income from your last three months’ paychecks. Your gross yearly salary will then be determined by multiplying this by the total number of pay periods in a year.

This is where Enrollmate can make things easier. If you’re feeling overwhelmed by paperwork, unsure about thresholds, or worried about penalties, we provide step-by-step support to help you understand your obligations, fill out forms correctly, and keep track of key deadlines.

We can help you avoid mistakes and stay in good standing with the SLC—no matter where you are in the world.

What about if you work as a freelancer?

You might also work for yourself or as a freelancer. It’s fine. All you have to do is show your income.

The SLC might infer your income again if you are unable to provide evidence. This leads to high monthly payments. Some people have multiple sources of income. Your total earnings will be used to calculate your Student Loan Plan 2 repayments.

How the exchange rate works?

The SLC will convert your earnings to GBP if they are in a currency other than pounds. When processing your form, they make use of the currency rate. It helps to calculate your monthly installments.

Your repayment amount may vary if the value of your currency fluctuates significantly. It’s important to monitor the exchange rate and notify the SLC of any changes.

Student loan plan 2 Is flexible and fair—Pay only when you can

The good news is, many people never repay the full loan. This is because of the 30-year rule. So, try not to worry too much. Simply make the necessary payments based on your income. Student Loan Plan 2 is designed to be affordable. You don’t pay if you’re not earning enough.

If you’d like, you can also make additional payments. It’s up to you. Some wish to make repayments more quickly. Others would rather wait. It’s okay either way. Your monthly payment will be £0 if your income is below the threshold.

This is fair. During unpaid time off, such as maternity leave or a career gap, you are not required to repay. Simply explain your circumstances to the SLC. If necessary, they will put off your repayments.

Does it affect your credit score?

Your credit score is not directly impacted by Student Loan Plan 2. But missed payments might!

Therefore, always respond to emails and letters from the SLC. Don’t ignore them. You might not be required to complete the form if you are in a country for less than three months. However, you have to notify the SLC within three months of leaving the UK if you plan to stay overseas for an extended period.

Another option is to set up a direct debit from a bank account in the UK or abroad. This facilitates the management of Student Loan Plan 2 installments. You may be required to pay a certain monthly sum if it is extremely difficult to verify your income. This is often the case if you are self-employed with no tax returns or invoices.

Always maintain accurate records of your profits to avoid this. If you’re confused, you can also ask the SLC for help. They have a team that deals with overseas borrowers.