How UK student loans work when you move to the United States: SLC rules, repayment thresholds, enforcement, and practical planning for British graduates abroad
Moving to the United States does not erase a UK student loan. It changes how you repay and who collects, but the underlying rules — income-contingent repayment, write offs after a fixed term, and government backing — remain the same. The key difference: instead of automatic PAYE deductions, you pay the Student Loans Company (SLC) directly, based on an assessment of your US income.
SLC treats you as an overseas borrower if you will be outside the UK for more than 3 months. You must complete an Overseas Income Assessment, provide proof of your US earnings, and then make regular payments by direct debit or manual transfer. If you ignore SLC, they can switch you to a high fixed monthly amount and mark your account in arrears.
This guide focuses on British graduates living and working in the USA — how to prepare before departure, what to send SLC once you arrive, how US salaries and tax rules interact with UK student loans, and the specific risks that affect expats who fail to engage.
SLC expects borrowers to update them if they will live outside the UK for more than 3 months. You are not allowed to simply “drop out” of the system because you have left PAYE. The requirement is the same whether you move to New York, rural Texas, or bounce between US states on short-term contracts.
Many graduates move first and tidy up admin later. Once you are in the US:
SLC triggers the “overseas” process when they know you are abroad. If you do not tell them and UK PAYE deductions stop, they will eventually treat you as non-compliant and move you to a fixed monthly charge at the top end of what they are allowed to demand.
For overseas borrowers, SLC cannot rely on HMRC payroll data. They use an Overseas Income Assessment instead. You supply evidence of your income, they apply a US-specific repayment threshold, and they issue a schedule showing how much you must pay each month.
SLC updates overseas thresholds annually. The threshold for the USA is set to be broadly comparable to the cost of living relative to the UK. The underlying rule stays the same: you pay 9% of income above the local threshold for your plan (and 6% for postgraduate loans), just as you would in the UK — only now it is done via direct payment rather than PAYE.
The calculation for a UK borrower in the USA follows the same logic as in the UK: convert income to GBP, subtract the relevant threshold for the USA, and take 9% (or 6% for postgraduate loans) of the excess. The difference is that thresholds and bands for the USA are published separately from UK domestic thresholds.
Hypothetical example to show the mechanics; actual thresholds and exchange rates change each year.
Mechanics:
The USA is typically treated as a high-income country in SLC’s overseas threshold system. That means thresholds tend to sit relatively high in GBP terms, but US salaries can also be significantly higher than UK equivalents. High earners in the US will usually repay more quickly than if they had stayed in a lower-paid UK role.
UK student loan repayments are not a US tax in any sense and they are not normally deductible for US federal income tax purposes. They sit alongside US federal and state tax obligations rather than being integrated into them.
If you also hold US federal student loans from a US degree, those have their own repayment rules and income-based plans. Treat UK and US loans as two separate systems: two sets of rules, two sets of obligations, and two sets of planning problems.
The risk for UK graduates in the USA is not immediate “US debt collection” — it is drifting into arrears because you stop responding to SLC. Once you are classified as non-compliant, SLC can apply a high default monthly repayment and formally mark your account in arrears.
SLC is a UK government-backed creditor. They do not have the same collection powers in the USA that they have in the UK through HMRC and PAYE, but they are not powerless either:
The rational approach for a USA-based graduate is simple: engage early, complete the Overseas Income Assessment each year, and keep payments aligned with your actual income. That keeps you out of arrears and avoids inflated fixed charges that bear no relationship to your real earnings.
If you move back from the USA to the UK and take UK employment, SLC will normally switch you back to PAYE collection via HMRC once your employer starts reporting you as liable for student loan deductions. The switch is not instant; there is often a transition period.
If you arrive back in the UK with a history of non-payment and arrears from your USA period, expect tighter scrutiny and possibly requests for additional payments. If you maintained good standing and followed SLC’s overseas process, the transition back to UK PAYE is usually administratively dull and automatic.
Use this as a working list before you leave the UK and after you land in the USA.
Engage with SLC, complete the overseas assessment, and keep payments aligned with your real US earnings. You stay out of arrears, avoid punitive fixed charges, and preserve the long-term protections built into the UK student loan system.
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.