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.