Can Student Loans ever be Statute Barred?

[Shendor]

Hi,

 

First of all I'd just like to say what a great site this is, I've been reading it for a long time now and the advice has really helped me in the past.

 

I've got a quick question regarding Student Loans. I've still got two outstanding loans from 96 and 2001. I remember the T&C's changed between taking the two loans - for the one taken in the 90's it said something along the lines of 'if you never earn over the £24k annual threshold then the loan will be cancelled by the time you reach 40'. Also, how they were repaid - the 90's one was down to me to pay, the 2000's one was taken directly as PAYE.

 

I've moved around a lot and have had no contact with Student Loans company since AT LEAST 2005. But student loans seem to be a special sort of debt, will my two loans now be statute barred. I'm scared to contact SLC in case it opens up a massive can of worms and they shout 'release the Kraken'.

 

Thanks for any insight.

[silverfox1961]

Hi and welcome to CAG

 

With the '96 loan, if you have not deferred it since 2005, it is 'possible' that it is SB but after September 98 student loans were taken out of the consumer credit act and as such never become SB.

 

With the 2001 loan, if you haven't deferred that either, there will be a debt collector chasing somewhere.

[Shendor]

Yes, that's what I feared. OK, thanks for clarifying.

[marmaris30]

No, they do not ever become SB, nor are they cancelled (any more) in the event of bankruptcy.

 

The 2001 loan you will repay in accordance with the rules if you're employed and earning above the threshold, or if you have to file a tax return. You're supposed to tell your employer if there is an outstanding loan, by ticking the appropriate box on the P46 form for new starters. Otherwise, you will eventually be picked up by HMRC/SLC matching your NI number, assuming you work in one place for long enough. If it's still outstanding when you turn 50, the remainder is cancelled.

 

Delinquent pre-1998 loans are often in the hands of debt collectors and it would be in your interest to deal directly with SLC than a DCA. If the reason for not repaying is that you are or have been on a low income, especially if you have proof, then there is no reason why you should continue to hide from them. Otherwise, you'll find your account and lots of penalty fees are passed or sold on to a DCA charlatan who has no regard for the law and every interest in ripping you off.

[Bazooka Boo]

No, they do not ever become SB

 

Erm, the OLD style SL's do actually come under the limitations act, which is six years. (so long as they have not been awarded a CCJ against you)

The new style SL's are contracts under seal, so have a 12 year limitation period.

 

A student loan is a debt under statute, this means that the Limitations Act (LA)1980 does apply. The limitations period on this debt is 6 years and not 12 years. However, as this is a new style student loan, HMRC can deduct repayments directly from your PAYE even if the debt is statute barred, which only allows you to defend the matter if it is taken through the courts.

 

It will be up to you whether you want to contact SLC or wait for them to contact you. If they did find you, they could start to recover the debt through your PAYE. If they were unable to find you, there is a possibility that they may treat this as a bad debt and sell it onto a debt collection agency (DCA). If this was to happen, the DCA would then try to recover the debt from you. If 6 years have passed with no written acknowledgment and no part payment you can then use the statute barred argument. If the DCA were to start court action, this can be used as a defence, however we would recommend that you get legal advice and take into account the additional costs that may be involved if your defence is unsuccessful.

 

National Debtline.