Students: Loans

Department for Education written question – answered on 8th October 2020.

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Photo of Stella Creasy Stella Creasy Labour/Co-operative, Walthamstow

To ask the Secretary of State for Education, what steps he is taking to ensure that women do not face unfair financial hardship as a result of the requirement to continue paying student loan repayments during maternity leave.

Photo of Michelle Donelan Michelle Donelan Minister of State (Education)

The repayment of student loans is governed by the Education (Student Loans) (Repayment) Regulations (2009) (as amended).

The current system protects borrowers, including people on maternity and other forms of parental leave, if they see a reduction in their income. Repayments are made based on a borrower’s monthly or weekly income, not the interest rate or amount borrowed, and no repayments are made for earnings below the repayment threshold. Repayments are calculated as a fixed percentage of earnings above the relevant repayment threshold – if income drops, so do the repayments made. Any outstanding debt is written off at the end of the loan term with no detriment to the borrower.

If at the end of the year, the borrower’s total income is below the relevant annual threshold, they may reclaim any repayments from the Student Loans Company made during that year.

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