Guide to deferring a mortgage-style student loan repayment

Types of student loans

If you took out a student loan while taking a university or college course that began before September 1998, you will have been given a loan known as a ‘mortgage style’ or ‘fixed-term’ loan. (Loans taken out after this point are known as ‘income-contingent loans’.)

Mortgage-style loans are paid directly to the Student Loans Company (SLC), the public-sector body that provides student loans, unlike income-contingent loans – for which HMRC collects repayments.

Interest rates on mortgage-style loans are typically higher than those for income-contingent loans because they are linked to retail price index (RPI) inflation. Interest on mortgate-style loans stood at 3.6% in January 2013, whereas interest on income-contingent loans in the same month was 1.5%.

Deferring repayments

You’ll usually have to repay mortgage-style loans through monthly instalments by direct debit. However, you may be able to defer repayments for one year at a time if you earn £27,813 or less per year, before tax or National Insurance are deducted from your pay. Repayments on income-contingent loans are deducted automatically from your wages and can’t be deferred.

If you’re eligible, you can defer payments by completing a form issued by the SLC and returning it by post. The SLC sends deferment forms directly to customers by post. If you have deferred another repayment at an earlier date, the SLC states that it will send you a form about two months before your next payment falls due.

What do you need to complete the deferment form?

The SLC requires you to complete, sign and date the form and post it directly to them with evidence of your ‘current means of subsistence.’ If you are claiming benefits, the SLC says that it will accept any one of the following pieces of evidence:

  • A Benefits Agency/Jobcentre stamp on the deferment application form.
  • A copy of a current benefit agency book confirming the customer’s name, address, date and the amount of benefit received.
  • A Benefits Agency letter confirming the customer’s name, date, type and amount received.
  • A recent bank statement showing benefits payments being made to the customer’s account.

The evidence needed if you are employed, self-employed, travelling, a student or living on unearned income is listed here.  According to the SLC, you’ll automatically be sent a new deferment form if your application has an obvious mistake – alternatively, you can contact the SLC to request a new form on 0141 243 3902.

At the time of publishing the DWP had declined to comment.

Welfare-related links for December 21st through January 25th

These are the welfare-related links we’ve been looking at between December 21st and January 25th:

  • Management in Practice – GPs could help save £190m in sick pay – Launching in 2014, the advisory service will allow GPs to identify employees who need support as well as issuing 'fit notes'. Lord Freud, Minister for Welfare Reform said: "Long-term sickness absence is a burden to business, to the taxpayer and to the thousands of people who get trapped on benefits when they could actually work.
  • The cost of government: what does the new transactions data really tell us? | News | guardian.co.uk – And the worst offender? The massive Department for Work and Pensions, which is Britain's biggest spending government department and administers benefits. So, for instance we have no idea how much it costs to process each of the 40m Jobseeker's allowance signing ons or to administer the benefit's 3.4m claims. The Department is responsible for 48,704,000 transactions in the high volume list alone – and we don't know the cost of any of them.
  • Reasons to be fearful: Oakley & Policy Exchange, foxes in the benefits coop | skwalker1964 – To keep this post to a readable length, I won’t go into detail on some of the other proposals that Mr Oakley would like to see implemented, or wild opinions that he holds, but will just list some of them:

    All assistance for unemployed people to find work provided by private/charitable providers
    Time-limiting unemployment benefits
    Cutting regional pay to fund infrastructure spending – thereby penalising those who are already disadvantaged in order to fund growth-measures, rather than taxing the wealthiest
    Selling public housing in expensive areas to private owners, forcing social tenants out of ‘desirable’ areas
    Claiming benefits leads to criminality
    Re-distributing income to low-paid people is a bad idea, because it ‘does nothing to encourage progression and self-sufficiency‘.

  • Request Initiative » Eleven work and pensions civil servants sacked for using Twitter or Facebook – The 11 sacked officials are among 116 DWP employees to have faced disciplinary action for blogging and social networking since January 2009, according to figures revealed under the Freedom of Information Act.
  • What is George Osborne doing to benefits? | Society | guardian.co.uk – Let's imagine someone receives £100 a month, all of which is spent on goods and services (domestic heating, food, bills, etc). The current inflation rate is 2.7%, which means in a year's time buying the exact same things would cost £102.70. Under the previous system, this is what benefits would've risen to. But with the changes, they would now only rise to £101 – leaving the recipient £1.70 worse off. Given the changes will last for at least three years, this represents a cut in income of between 3% to 6%, depending what happens with inflation. In reality, the impact could be even worse, as research by the Institute for Fiscal Studies suggests low-income households experience a higher inflation rate than richer ones.

Fewer people investigating private contractors fraud, while benefit investigators increase

Here’s a good example of following the money to see exactly where the priorities lie on two kinds of ‘benefit fraud’: fraud by benefit claimants, and fraud by the companies who get the contracts to run welfare services.

Rajeev Syal reports that the government has cut those people responsible for investigating fraud by private contractors from 69 to 49 in two years: a drop of 29%. Continue reading

Testing the claims of politicians: the disability groups that Maria Miller ‘never met’

Thanks to L S McKnight in the comments for pointing us to this report from Third Force News on the Scottish disability charities who boycotted a meeting with disability minister Maria Miller after she falsely claimed to have previously met them. Continue reading

The real life impact of being targeted by a Sun journalist as a ‘benefit cheat’

The Sun’s announcement that it is targeting benefit cheats has led to at least one very nasty experience for a 68-year-old former dustman.

Elaine Milton writes movingly about her father’s injury, countless operations, and recent discovery of bowls, “with the support of his doctor”. Then:

“You can imagine how I felt when I heard that a Sun journalist and photographer had been knocking on his door, taking his picture, telling him that they were doing a story on benefit cheats. Continue reading