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I graduated from university in 2011 with student loans totalling roughly £30k. After a brief stint working in the UK, I moved to work in Japan. A month or so after moving I informed SLC of my new address and employment details and was put on a monthly repayment of around £45. This money was being taken out of my emergency fund in my UK account (a few £1000).

Fast forward six years and I'm still living in Japan. I had assumed that I had been paying student finance diligently for the previous five years. However, at some point (due to another unrelated fee) the money ran out in my UK account. Also I was stupid enough to not realise I had to update them annually even if my situation hasn't changed. After realising this I starting panicking. I logged into the SLC website and realised that they had decided to charge me the MAX £256 a month repayments as arrears. I now owe over £10k in arrears alone with an additional £20k loan to be paid. If the monthly repayments were calculated correctly I should be about £3500 in arrears. Surely this is ridiculous?!

I'm not sure how I should proceed from here. I have no intentions ever of returning home to work in the UK. If I were to just ignore the arrears and let the interest pile up would they in any way be able to find me and make me pay up? I have a new address and have just started working in a new organisation so part of me feels I could just ride it out until the 25 year cut off point.

Alternatively for peace of mind I would be happy to begin repaying the loan at my income-dependant monthly level. I presume that i could give them evidence of what I was earning during that time to amend the arrears to about 3500GBP, but I am not sure. I have no idea about how lenient they are about arrears repayments. Sources are wildly inconsistent, from threatening court action to simply being repaid through monthly repayments. I've even heard of cases that wipe off all arrears and begin payment as normal.

I would love any feedback from anyone who has experienced a similar situation. Have you started making repayments years after living abroad, and did they retroactively hit you with a huge arrears? If so, did they arrange a reasonable repayment plan for those arrears?

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    I don't think the 25-year cut off wipes out arrears, it only wipes out any remaining balance that you weren't supposed to have repaid before. – GS - Apologise to Monica Apr 27 at 6:07
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I would suggest contacting SLC about the situation, and see what you can do about the additional charges. It is likely you can get the additional fees waived on the grounds that they truly do not represent an increase in SLC's cost as a result of your default.

Ultimately a creditor can go after any assets in your name in the UK and abroad, particularly if the amounts are high enough. Given that SLC is a statutory body they may have additional powers. Once a creditor has to use the courts to seize assets, the costs associated with collection will be added to the bill and could become a significant portion of it.

If the loan remains unpaid, it will ultimately be left to UK taxpayers and future students to foot the bill.

If the practice is common enough, the UK might have to move to a more US style system where loans cannot be discharged through bankruptcy and be outsourced to commercial banks at higher rates of interest.

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