Through the scheme the government sought to recover some of the costs of higher education by charging tuition fees and allowing students to defer payment of these fees until the student's income reached a certain level.
The Student Loans Company (SLC) that manages student loans for students studying in the UK makes sure that the repayment of loans only begins after the student has left higher education and is earning over a threshold of: These loan repayments are collected via the pay-as-you-earn (PAYE) tax system by employers deducting them from the salary of their employees and passing the money on to HM Revenue and Customs (HMRC) along with other contributions (income tax and national insurance).
HMRC then provides the full financial year's worth of deductions to the Student Loans Company beginning from May after the financial year and may provide updates until December.
[2] The loans are also repaid through tax returns by self assessment, with payments due by January following the end of the financial year and forwarded to SLC in April.
Customers who reside or work overseas are required to contact SLC to arrange repayment of their loans directly to SLC with another means of income assessment.