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Partial cancellation of student loan debt

 

The information on this page only applies to you if you received a Maintenance Loan from Student Finance Wales in academic year 2010/11, 2011/12 2012/13. 2013/14.


Am I eligible for partial cancellation of Maintenance Loan?

If you took out a Maintenance Loan in academic year 2010/11, 2011/12, 2012/13 or 2013/14 from Student Finance Wales, the Welsh Government may provide you with a partial cancellation of up to £1,500. The reduction will be applied to the balance of your student loan by the SLC when you start repaying.


You will not be eligible for a partial cancellation if you have any outstanding charges, costs, expenses or penalties in relation to your loan or if you are in breach of your loan agreement.

If you have a loan balance for more than one of the eligible academic years mentioned above, the cancellation will only ever be applied to the first loan which you took. So if you have a loan in AY 11/12 and AY 12/13 the cancellation will be applied to the AY 11/12 loan balance.


How do I benefit from partial cancellation of Maintenance Loan?

After you have made the first repayment of your student loan we will automatically cancel up to £1,500 of the Maintenance Loan that you took out in academic year 2010/11, 2011/12, 2012/13 or 2013/14 . This repayment can either be mandatory (through your employer) or voluntary (through the Student Loans Company – such as, by making an online payment).


However, in order to receive the full benefit of the partial cancellation, you should have received each instalment of the maintenance loan due for academic year 2010/11, 2011/12, 2012/13 or 2013/14 before making a repayment


How do I make a payment?

Repayment can be by any of the following methods:

  • credit or debit card;
  • Direct Debit;
  • standing order; or
  • through the tax system, i.e. PAYE or Self Assessment.
  • cheque

You can make a repayment of any amount in order to receive partial cancellation of the Maintenance Loan, but there is a minimum amount that we can accept if you want to make a repayment online.

  • The minimum card repayment we can accept online is £5.
  • The minimum amount a Direct Debit can be set up for is £5 per month.

How much of my Maintenance Loan will be cancelled?

The calculation to work out the amount of your Maintenance Loan that is cancelled is complex and depends on:

  • the value of your first repayment;
  • the amount of Maintenance Loan you took out in academic year 2010/11, 2011/12, 2012/13 or 2013/14; and
  • your total outstanding balance at the time you make your first repayment.

Below are some simple examples that show how the amount of cancellation can be affected:

Your first repayment is automatically split across the loans (and accumulated interest) you took out during your studies. This means you may actually have more of your 2010/11, 2011/12, 2012/13 or 2013/14 Maintenance Loan cancelled than the following examples show:

Example 1

If you took out £3,000 Maintenance Loan in 2010/11, 2011/12, 2012/13 or 2013/14 and your first repayment to us is £50, we would cancel £1,500 of your outstanding student loan debt.

Example 2

If you took out £1,200 Maintenance Loan in 2010/11, 2011/12, 2012/13 or 2013/14 and your first repayment to us is £5, we would cancel £1,195 of your outstanding student loan debt.

Example 3

If you took out £200 Maintenance Loan in 2010/11, 2011/12, 2012/13 or 2013/14 and your first repayment to us is £200, you would not receive any debt cancellation.

Example 4

If you take out £1,500 maintenance loan in 2011/12 and you made a voluntary repayment of £5 to us after you received your first instalment (of £500), then £495 of your outstanding student loan debt will be cancelled.


The partial cancellation will not be applied to your remaining instalments due and there will be an additional £1,000 balance on your account at the end of the year (plus interest).

Example 5

If you take out £1,500 maintenance loan in 2011/12 and you made a voluntary repayment of £50 to us after you received your second instalment (of £500), then £950 of your outstanding student loan debt will be cancelled.


The partial cancellation will not be applied to your remaining instalment due and there will be an additional £500 balance on your account at the end of the year (plus interest).


Will I receive a receipt for my repayment?

Yes - when you make your payment you can request a receipt.


When will my partial cancellation be deducted from my balance?

If you are eligible for a partial cancellation, once you have made your first repayment we will then calculate how much will be deducted from your balance. The deduction and balance adjustment will happen shortly after you have made your repayment and normally be shown on your next annual statement.


Is there an expiry date for the partial cancellation policy?

No - there is no expiry date. As long as you took out a Maintenance Loan in the 2010/11, 2011/12, 2012/13 or 2013/14 academic year and 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.


This means that if you are currently unable to make a repayment you will not miss out as we will apply your partial cancellation once you have made your first repayment, either through your salary, or, if you are self employed, through your Self Assessment repayment.


Can I receive the partial cancellation more than once?

No. You should note that you are only entitled to receive the partial cancellation once. So if you receive a Maintenance loan in the 2010/11, 2011/12, 2012/13 or 2013/14 academic year the partial cancellation will only be available for one of these years.


Why has the partial cancellation policy been introduced?

In a statement to Plenary on the 18 March 2009, the then Minister for Children, Education, Lifelong Learning and Skills announced the Welsh Assembly Government response to the report on phase one of the Review of Higher Education in Wales submitted on 1 October 2008. Its proposals to remodel the student finance system were based on the 'One Wales’ commitments to provide extra assistance with student debt and to provide investment in the higher education sector.


In line with these proposals The Cancellation of Student Loans for Living Costs Liability (Wales) Regulations 2010 and subsequently 2011 make provision for students who receive a Maintenance loan from Student Finance Wales for academic year 2010/11, 2011/12, 2012/13 or 2013/14 respectively, to have a partial cancellation of up to £1,500 applied to their loan balance once they start to make their repayments.


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