One step to knock £1,500 off your student loan cost
Welsh students who received a maintenance loan over the past six years can get up to £1,500 wiped off their debt.
Students who received a loan for living costs from Student Finance Wales in the academic year 2010/11 or after qualify for the windfall once they make their first repayment.
The reduction will be applied to the balance of your student loan by the Student Loans Company when you start repaying.
The partial cancellation scheme was agreed by the Welsh Government in August 2010.
A Welsh Government spokeswoman said: “The partial cancellation scheme was designed to encourage Welsh students to attend university if they have the ability and to reduce their overall debt levels.
“We are also planning to introduce the most generous and progressive system anywhere in the UK for students that will see them receive the equivalent of the National Living Wage during term time while they study from September 2018.”
Students will be eligible for a partial cancellation if they make a oneoff repayment on their loan.
They can make a repayment of any amount in order to receive partial cancellation of the Maintenance Loan, but there is a minimum of £5.
This can be either voluntarily (including when they are still at university) or when they have left university or college and their income is over the repayment threshold.
This applies to students who received their loan in 2010/11, to 2016/17.
Students will not be eligible for a partial cancellation if there are any outstanding charges, costs, expenses or penalties in relation to the loan or if they are in breach of their loan agreement.
The partial cancellation will be £1,500 unless students have taken out a smaller Maintenance Loan in the eligible year.
If they borrowed less than £1,500, the partial cancellation will be less – in line with the amount borrowed and students are only entitled to claim partial cancellation once.
For example, if a student has a loan in academic year 2011/12 and academic year 2012/13 the cancellation will be applied to the academic year 2011/12 loan balance.
After the first repayment of the student loan has been made, Student Finance Wales will automatically cancel up to £1,500 off the balance of the first Maintenance Loan.
This repayment can either be made through an employer or voluntarily through the Student Loans Company.
Loans normally only have to start being repaid once the borrower earns over £15,795 a year, but voluntary repayment can be made after receiving the first instalment.
To benefit fully from the partial cancellation, students can make a minimum voluntary payment of £5 when they have received more than £1,500 worth of Maintenance Loan in their first year of borrowing.
In other words – the earlier payment is made, the greater the saving.
Once the up-to-£1,500 sum is deducted, plus whatever you pay off, it won’t attract interest, which would otherwise build up, adding to your debt.
While up to £1,500 can be cancelled, the exact amount is based on the following calculation:
Take the maintenance loan received for the academic year in question.
Then subtract your payment made.
Whatever that figure is, is the amount of debt cancelled (capped at £1,500).
The amount is automatically deducted when you make your first loan repayment.
Below are some examples that show how the amount of cancellation can be affected
Example 1 Maintenance Loan: £3,000 First repayment: £50 Remaining student loan debt after part of it is cancelled: £1,500 Example 2 Maintenance Loan: £1,200 First repayment: £5 Remaining student loan debt after part of it is cancelled: £1,195 Example 3 Maintenance Loan: £1,500 First repayment: £5
Remaining student loan debt after part of it is cancelled: £495 There is no expiry date. As long as the Maintenance Loan was taken out in academic year 2010/11 or after and you are eligible for the partial cancellation policy your deduction will be applied when you make your first repayment.
If your income remains below the repayment threshold for several years, you will still be eligible for a partial cancellation if or when you enter repayment in the future.
To be eligible people have to be a Welsh “domiciled” student but you can study anywhere in the UK.
They need to have taken out a maintenance loan in either 2010/11 or after from Student Finance Wales.
People who may not be eligible for a partial cancellation include those who failed to keep up payments, or are in breach of your loan agreement.