Managing UK student loans while living and working in Canada: SLC rules, overseas thresholds, exchange rates, compliance, and practical planning for British graduates abroad
Moving to Canada does not close your UK student loan account. Your loan remains an income-contingent obligation to the Student Loans Company (SLC); only the collection mechanism changes. Instead of automatic PAYE deductions through HMRC, you move to direct payments after an overseas income assessment.
Canada is treated as a high-income country in SLC’s overseas repayment system. That means higher repayment thresholds than some lower-income countries, but also a realistic expectation that UK graduates working in Canadian cities will often earn enough to make regular repayments. SLC assesses your Canadian income in local currency, converts it to GBP, and sets a monthly payment for a 12-month period.
This page covers the concrete mechanics: how and when to notify SLC, what documents to provide from Canada, how Canadian salaries and tax rules interact with UK student loans, how exchange rates feed into your repayment level, and the consequences if you stop engaging with SLC while abroad.
SLC requires borrowers to inform them if they will be outside the UK for more than 3 months. Once you are classified as an overseas borrower, you must provide evidence of your income and make payments directly. The rule is the same whether you are on a permanent visa in Toronto, a temporary work permit in Vancouver, or a series of fixed-term contracts across different provinces.
Many graduates move first and regularise their loan situation later. Once you are in Canada:
Ignoring SLC while your UK PAYE deductions have stopped does not pause your obligations. It simply pushes you toward the default position: high fixed monthly payments based on an assumed income level and formal arrears if you do not pay.
With no access to Canadian payroll data, SLC relies on your submitted evidence. The Overseas Income Assessment is the core mechanism for setting your monthly payment when you live abroad. You provide documentation, SLC converts your income into GBP, and then applies the Canadian threshold for your plan type.
Your obligation is to respond and to be accurate, not to over-predict future earnings. If your income drops mid-year, you can ask SLC to reassess rather than silently defaulting on a payment schedule that no longer fits.
The core rule is unchanged by geography: for undergraduate loans you pay 9% of income above the relevant threshold, and for postgraduate loans you pay 6% above the postgraduate threshold. Overseas thresholds are country-specific; Canada has its own values that broadly reflect relative earnings and living costs.
Illustrative mechanics only. Actual thresholds and exchange rates change over time.
Process summary:
High Canadian salaries relative to UK norms accelerate repayment for many graduates. The flip side is that periods of low income, part-time work, or gaps between contracts can be formally reflected in a lower assessment if you inform SLC, rather than silently absorbing a payment level that no longer matches reality.
UK student loan repayments are not part of the Canadian tax system. Canada Revenue Agency (CRA) does not collect UK student loans, and your UK repayments do not normally reduce your Canadian taxable income. Treat them as a separate outgoing, similar to a loan payment to any other overseas creditor.
If you also have Canadian student loans, those have separate rules, interest subsidies, and tax treatments. Keep the systems mentally separate: UK loan to SLC, Canadian loans to Canadian lenders or government programs.
Living in Canada adds two extra variables: exchange rates and income volatility (especially for contractors and seasonal workers). Both can be managed if you treat them explicitly rather than as background noise.
The policy logic is simple: repayments track your earning capacity, not short-term FX noise. Engage with SLC on the income side, then manage FX and transfer costs on your side rather than hoping volatility will justify non-payment.
The main risk in Canada is administrative, not legal drama on day one. If you ignore SLC, fail to complete Overseas Income Assessments, or stop paying under an agreed schedule, your account will move into arrears and SLC will assume you are a higher earner than your paperwork shows.
SLC does not have CRA’s powers and cannot unilaterally deduct from Canadian payroll or seize assets. However:
Staying in the system is cheaper than being dragged back into it. Completing an annual form is a lower-friction task than dealing with years of arrears, fixed default payments, and third-party collectors.
Use this as a working list before departure and during your first years in Canada.
In Canada, the system remains income-contingent and rule-bound. Stay inside it, manage FX and paperwork consciously, and the loan behaves predictably rather than as an open-ended threat in the background.
UK Education Policy Specialist
With over 15 years of experience in UK education policy and student finance, Dr. Sharma founded Student Loan Calculator UK to help students navigate the complex world of student loans.