Student Loan Repayment Plan 2 overseas threshold

Peter De'Ad made this Freedom of Information request to Student Loans Company Limited

This request has been closed to new correspondence from the public body. Contact us if you think it ought be re-opened.

The request was successful.

Dear Student Loans Company Limited,

My questions relate to SLC web page:
http://www.studentloanrepayment.co.uk/po...

Please explain why repayments based upon UK income are assessed as a simple percentage (9% above £21000) but overseas income appears to be rounded up to blocks of £4200, equating to increasing repayment chunks of £378?

I believe that the data used to establish purchasing parity incomes is derived from the World Bank but I have been unable to locate the source data. Please provide this data or a link to it, together with any formula/explanation as to how the threshold table is arrived at.

Exchange rates - please provide the source data for how the threshold exchange rates are calculated as they bear little relationship to those published on popular foreign exchange websites. http://www.studentloanrepayment.co.uk/po...

SLC website states the overseas thresholds are needed 'To take account of differences in living costs, the repayment threshold in a foreign country may not be the same as in the UK'. Given that many of these countries require a sizeable salary to maintain an expat lifestyle that could be considered comparable with that enjoyed in the UK, what is the rationale for suggesting a 'locals' purchasing parity income in Afghanistan is a mere £4200 when an expats expenditure on items such as security, telecoms, imported western food etc. would be vastly more than even the UK equivalent of £21,000. (and not doubt remunerated accordingly).

Yours faithfully,

Peter De'ad

FOI Requests, Student Loans Company Limited

Dear Mr De'Ad

Thank you for your email dated 11/07/2017.

Your request is being considered under the terms of the Freedom of
Information Act 2000 (“FOIA”).

Your request has been allocated reference 132-17.

We will respond to you under the terms of the FOIA and within 20 working
days.

We will contact you further for clarification of your request if this is
considered necessary.  

Yours sincerely

Louise Chapman | Legal Executive
Student Loans Company
100 Bothwell Street, Glasgow G2 7JD
e: 32080  t: 0141 306 2080

[1]www.slc.co.uk
Follow us at [2]Twitter/SLCcomms for the latest corporate news and updates

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References

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1. http://www.slc.co.uk/
2. http://www.twitter.com/SLCcomms

FOI Requests, Student Loans Company Limited

Dear Mr De’Ad

I refer to your recent email dated 11/07/2017 requesting the following
information under the Freedom of Information Act 2000 (“FOIA”):

“My questions relate to SLC web page:
 [1]http://www.studentloanrepayment.co.uk/po...

Please explain why repayments based upon UK income are assessed as a
simple percentage (9% above £21000) but overseas income appears to be
rounded up to blocks of £4200, equating to increasing repayment chunks of
£378?

I believe that the data used to establish purchasing parity incomes is
derived from the World Bank but I have been unable to locate the source
data. Please provide this data or a link to it, together with any
formula/explanation as to how the threshold table is arrived at.

Exchange rates - please provide the source data for how the threshold
exchange rates are calculated as they bear little relationship to those
published on popular foreign exchange websites.
[2]http://www.studentloanrepayment.co.uk/po...

SLC website states the overseas thresholds are needed 'To take account of
differences in living costs, the repayment threshold in a foreign country
may not be the same as in the UK'. Given that many of these countries
require a sizeable salary to maintain an expat lifestyle that could be
considered comparable with that enjoyed in the UK, what is the rationale
for suggesting a 'locals' purchasing parity income in Afghanistan is a
mere £4200 when an expats expenditure on items such as security, telecoms,
imported western food etc. would be vastly more than even the UK
equivalent of £21,000. (and not doubt remunerated accordingly).”

The webpage referred to in your request relates to the overseas thresholds
applicable to plan 2 (or post-2012) Income Contingent Repayment student
loans.  

Response

For your first question, repayments are calculated in accordance with the
provisions of the Education (Student Loans) (Repayment) Regulations 2009
([3]http://www.legislation.gov.uk/uksi/2009/...), as amended
(amendments available at
[4]http://www.legislation.gov.uk/changes/af...).  The
£4,200 “blocks” are provided for in Regulation 76 which applies to
overseas borrowers who have a Plan 2 student loan.  The calculation of
repayments for plan 2 overseas borrowers is based on a statutory
provision, which SLC administers on behalf of the UK and Welsh Governments
for plan 2 borrowers.

For your second question, I can confirm that the foreign exchange rate is
not specifically provided for in the 2009 Repayment Regulations.  As
instructed by the Department of Business, Innovation and Skills (“DBIS”)
(the relevant government department responsible for Higher Education
policy at the time), SLC uses the average annual exchange rate for the
most recent calendar year available from Her Majesty’s Revenue & Customs
(“HMRC”) to convert income from foreign currencies to sterling.  This
instruction took effect from April 2012, and was applicable to both Plan 1
and Plan 2 ICR loans.  Prior to this change, SLC applied the annual
average exchange rate for the most recent tax year available from HMRC.

The HMRC foreign exchange rates can be found at the following internet
link:

[5]https://www.gov.uk/government/publicatio...

The specific rates used by SLC are the average yearly rates which can be
found at:

[6]https://www.gov.uk/government/uploads/sy...
 
Your third question asks for rationale in relation to differences in
living costs.  The original aim of the policy was generally for the
overseas repayment threshold used to reflect the cost of living in the
country of residence.  However, SLC does not hold a rationale as to why
the cost of living that applies to all people in a country, rather than a
different ex-pat rate, was issued.  As SLC is not the policy-maker, and
only administers the student loan scheme in line with the policy aims of
the relevant UK administration, this question may be more appropriate for
the Department for Education (“DfE”), which took over responsibility for
Higher Education policy functions from DBIS, following machinery of
government changes in July 2016.  DfE can be contacted using the details
available at
[7]https://www.gov.uk/government/organisati....

Internal review process

If you are dissatisfied with the handling of your request, you have the
right to ask for an internal review.

Internal review requests should be submitted within three months of the
date of receipt of the response to your original request and should be
addressed to the Freedom of Information Office, Student Loans Company
Limited, 100 Bothwell Street, Glasgow, G2 7JD,   Email:
[SLC request email].  Please remember to quote the reference number
above in any future communications.

If you are not content with the outcome of the internal review, you have
the right to apply directly to the Information Commissioner for a
decision.  The Information Commissioner can be contacted at:

Information Commissioner's Office
Wycliffe House  
Water Lane  
Wilmslow  
Cheshire  
SK9 5AF

Yours sincerely

Louise Chapman | Legal Executive
Student Loans Company
100 Bothwell Street, Glasgow G2 7JD
e: 32080  t: 0141 306 2080

[8]www.slc.co.uk
Follow us at [9]Twitter/SLCcomms for the latest corporate news and updates

show quoted sections

References

Visible links
1. http://www.studentloanrepayment.co.uk/po...
2. http://www.studentloanrepayment.co.uk/po...
3. http://www.legislation.gov.uk/uksi/2009/...
4. http://www.legislation.gov.uk/changes/af...
5. https://www.gov.uk/government/publicatio...
6. https://www.gov.uk/government/uploads/sy...
7. https://www.gov.uk/government/organisati...
8. http://www.slc.co.uk/
9. http://www.twitter.com/SLCcomms