The Education (Student Loans) (Repayment) (Amendment) (No. 4) Regulations 2022

EXPLANATORY NOTE

(This note is not part of these Regulations)

These Regulations amend the Education (Student Loan) (Repayment) Regulations 2009 (S.I. 2009/470) (“the 2009 Regulations”) and revoke spent enactments.

The amendment of the 2009 Regulations:

• reorganises student loans within the scope of the 2009 Regulations into five plans, including a new plan 5 loan for certain courses beginning on or after 1st August 2023;

• for borrowers who have a plan 2 loan (formerly a “post-2012 student loan”):

  • maintains the income-based repayment threshold (above which a borrower who has reached the statutory repayment due date in regulation 15 is required to make repayments) at £27,295 until the end of 5th April 2025, and

  • changes the annual uprating of the repayment threshold thereafter from a calculation based on differences in average earnings to one based on the retail price index;

• introduces fixed instalment rates, which:

  • are used to calculate repayments by overseas borrowers who have not provided required information about their income,

  • replace the fixed instalments set out in regulation 76 (which is omitted), and

  • for repayments of a plan 2 loan, a plan 3 loan (formerly a “postgraduate degree loan”) or a plan 5 loan, are recalculated annually based on the median salary for graduates;

• consolidates the provisions reducing interest rates on plan 2 and 3 loans applied by S.I. 2021/677, 1005, 1378, 2022/889 and 1151 (which are revoked);

• omits spent provisions;

• makes incidental, supplemental or technical amendments.

The student loans within the scope of the 2009 Regulations are:

• loans under section 22 of the Teaching and Higher Education Act 1998 (c. 30),

• loans under section 73(f) of the Education (Scotland) Act 1980 (c. 44) in respect of which the Scottish Ministers have determined that repayments are to be collected by His Majesty’s Revenue and Customs, and

• loans subject to transfer arrangements under the Sale of Student Loans Act 2008 (c. 10).

Part 1 of the 2009 Regulations (general) is amended as follows:

• regulation 3 (interpretation) is amended to revise the definitions of expressions used in the 2009 Regulations;

• new regulations 3A to 3E set out the five student loan plans within the scope of the 2009 Regulations;

• regulation 4 (application: general) is amended to set out what is required to be repaid in relation to a student loan;

• regulation 5 (Wales) is amended in consequence of new regulations 3A to 3C;

• regulation 6 (Scotland) is omitted in consequence of new regulation 3D;

• regulation 7 (application to transferred loans in England and Wales) is amended in consequence of new regulations 3A to 3C;

• new regulation 8A sets out how to calculate the country-specific multiplier, which is used to determine the amounts of repayments payable by overseas borrowers;

• new regulation 8B sets out how to calculate the repayment threshold variable, which is used to determine:

  • the rate at which a plan 2 loan bears interest;

  • whether repayments are required in relation to a plan 1, 2 or 5 loan;

• new regulation 8C provides that the examples in the 2009 Regulations (found in new regulations 8A, 8B and 74A) are only illustrative.

Part 2 of the 2009 Regulations (provisions applicable to all repayments) is amended as follows:

• regulation 9 (interpretation) is amended to revise the definitions of expressions used in the Part 2;

• regulation 14 (interest and penalties) is amended to provide that it applies only in relation to plan 1, 2, 3 and 5 loans (plan 4 loans are subject to the Repayment of Student Loans (Scotland) Regulations 2000 (S.S.I. 2000/110));

• regulation 15 (timing of repayments: general) is amended in consequence of:

  • new regulations 3A to 3C;

  • the amendment of regulation 16;

• regulation 16 (timing of repayment: teachers and eligible teachers) is amended in consequence of the conclusion of the repayment and reduction provision for eligible teachers under the Education (Teacher Student Loans) (Repayment etc.) Regulations 2003 (S.I. 2003/1917);

• regulations 18 to 20A are amended in consequence of new regulations 3A to 3E;

• new regulation 20B (which comes into force on 16th January 2023):

  • limits prospectively the rate at which certain student loans bear interest;

  • consolidates the provisions reducing interest rates on plan 2 and 3 loans applied by S.I. 2021/677, 1005, 1378, 2022/889 and 1151;

  • is amended on 6th April 2023 in consequence of new regulations 3B, 3C and 3E;

• regulation 21 (interest rate on the loans) is amended in consequence of new regulation 3A;

• regulation 21A (interest rate on post-2012 student loans) is amended:

  • on 16th January 2023 in consequence of new regulation 20B;

  • on 6th April 2023 in consequence of new regulation 3B;

• new regulations 21AA and 21AB, which replace regulation 21A(12) to (14), set out the income thresholds in relation to which a plan 2 loan bears interest;

• regulation 21B (interest rate on postgraduate degree loans) is amended:

  • on 16th January 2023 in consequence of new regulation 20B;

  • on 6th April 2023 in consequence of new regulation 3C;

• new regulation 21C provides for a plan 5 loan to bear interest at the standard interest rate;

• regulations 24, 25 and 27 are amended in consequence of new regulations 3A to 3E.

Part 3 of the 2009 Regulations (repayments by assessment to income tax) is amended as follows:

• regulations 28 and 29 are amended in consequence of new regulations 3A to 3E, 8A, 8B and 8C and new Schedule 1A;

• regulations 36 and 40 are amended to omit spent provisions.

Part 4 of the 2009 Regulations (deduction of repayments by employers) is amended as follows:

• regulations 41, 42, 44, 50, 55, 56, 57, 60, 61, 67 and 68 are amended in consequence of new regulations 3A to 3E and the following amendments to Part 4;

• regulation 41A (real time information employers) is omitted in consequence of regulation 14 of the Income Tax (Pay As You Earn) (Amendment) Regulations 2013 (S.I. 2013/521) (which exempts certain employers from the requirement to be Real Time Information employers on and after 6th October 2013);

• regulation 43 (new employee to declare repayments liability) is amended, and regulation 43A (commencement of employment with a Real Time Information employer) is omitted, in consequence of the replacement of Form P46 with the starter checklist (see https://www.gov.uk/new-employee/employee-information);

• regulation 59 (return by employers) is amended in consequence of new regulations 3A to 3E and paragraph 8(2) of Schedule 12 to the Finance Act 2004 (c. 12);

• regulation 59B (real time returns of information about payments of earnings) is amended to omit spent provisions relating to the 2014-15 and 2015-16 tax years;

• regulations 59E and 59G are amended to omit spent provisions.

Part 5 of the 2009 Regulations (repayment by overseas borrowers) is amended as follows:

• regulations 71, 73 and 77 are amended in consequence of new regulations 3A to 3E;

• regulation 74 (repayment by fixed instalments) is amended in consequence of new regulation 74A;

• new regulation 74A sets out how to calculate the fixed instalment rate payable by overseas borrowers who have plan 2, 3 or 5 loans;

• regulation 75 is amended in consequence of new regulation 75A;

• new regulation 75A sets out how to calculate the applicable threshold, which is used to determine whether an overseas borrower is required to make repayments in relation to a plan 1, 2, 3 or 5 loan;

• regulation 76 is omitted in consequence of new regulations 74A and 75A.

Part 6 of the 2009 Regulations (insolvency) is amended:

• in consequence of new regulations 3A to 3E;

• to omit spent provisions.

A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.

The Welsh Ministers’ Code of Practice on the carrying out of Regulatory Impact Assessments was considered in relation to the exercise of the Welsh Ministers’ functions under these Regulations. As a result, a regulatory impact assessment has been prepared as to the likely costs and benefits of complying with these Regulations. A copy can be obtained from the Higher Education Division, Welsh Government, Cathays Park, Cardiff CF10 3NQ.

An Explanatory Memorandum is published alongside this instrument at www.legislation.gov.uk.