Repaying student loans if you drop out
I'm just wondering if anyone knows what would happen if you were to drop out of uni after you receive the first payment of your student loan? Would you have to pay back what you spent straight away or would you only pay back once you're earning over a certain amount a year?
Original post by EmilyK123
I'm just wondering if anyone knows what would happen if you were to drop out of uni after you receive the first payment of your student loan? Would you have to pay back what you spent straight away or would you only pay back once you're earning over a certain amount a year?
It depends on when you leave and which loans.
Maintenance Loan: You are only entitled to Student Finance whilst you're a student. So if, for example, you leave one month after starting your course, your Maintenance Loan will be repayable in full immediately to SF, for any amount of time after that month that your payment covers. The first month's SF will be repayable under the normal rules, where you repay as deductions from your wage after you hit the £21,000 earnings threshold.
Tuition Fee Loan: There are two or three points in the academic year at which your Tuition Fee Loan becomes immediately repayable. The longer you stay at uni, the more you will owe. In this instance, you will owe the uni that money and not SF. When you leave, SF will demand any loan paid so far, from the uni. The uni will then recoup it from you. Anything the uni demands, will be repayable in full, immediately.
For both the Maintenance and Tuition Fee Loans, the later in the year you leave, the greater your debt, but the less you will have to repay immediately. Also bear in mind that you may be tied to an accommodation contract for a full year with no (or a difficult) exit clause. You could find yourself having to pay rent on accommodation you can't use (you can't live in uni Halls if you're not a student) whilst simultaneously having no Maintenance Loan to pay for it, plus having a Maintenance Loan repayment plan.
Both SF and your uni recognise that you will, in reality, be unlikely to be able to make those immediate repayments. Both should negotiate an individual repayment plan with you, which can be as low as £10 a week.
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