Recently, the team at Pareto Law were interested to read that thousands of university students about to start paid internships this summer have been warned that they’re student loan payments will be automatically taken from their wage.
Paying student debt whilst at university
The Telegraph has reported that due to a little-known quick in the earnings threshold beyond which payments must be made, many working students will now feel the burn. The government often highlights that graduates will only have money taken out of their account for their loan once they’re earning £21,000 a year.
However, due to the limited being devised on a weekly or monthly basis through pay as you earn (PAYE) payroll, students who take home at least £333 in any week or £1,493 in any given month will have their payslip docked to begin repayments to the Student Loans Company (SLC).
How much will I be paying back?
The threshold for loans taken out before 2012 is £17,335 a year. This equates to the take-home pay of £286 a week or £1,409 a month. Students who take loans out must repay 9% of the difference between what they earn and the threshold until the debt is repaid.
Speaking about the payments, the SLC said “It is possible that a student loan may be taken in a pay peiord when the montly or weekly threshold is exceeded, but when the whole year’s income did not exceed £21,000. In this situation the repayer will be able to apply to SLC for a refund of the payments made in that year – as the annual threshold (£21,000) was not met.”
Students struggling with debt
Some students – particularly those doing well-paid internships for employers – have found that they’ve already started paying back their loans. One second year undergraduate claims he was shocked to find out monthly payments of £8 were coming out of his salary he received from his summer job last year. The student, who wishes to remain anonymous, said he hopes to secure a job at the firm when he graduates next year and needed every penny to cover university costs.
Although there are no official statistics on how much interns get paid, it’s thought that paid placements will offer anything from £1,126 per month (the minimum wage) up to £2,000 a month (the equivalent of £30,000 per year).
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