In order to be eligible to various benefits provided by the government most workers in the UK have to pay National Insurance Contributions. Eligibility to some of these benefit can depend on the level of a persons contribution record. So even if they are not working (through choice, unemployment or sickness) it may be important to keep paying National Insurance Contributions.
People are issued with a National Insurance Number and this will be used throughout life - by employers paying your contributions;when applying for welfare benefits or pensions; for some personal financial matters; when registering to vote etc. Many people in the past will have been issued with a plastic card (like a credit card) with their number on. More recently a letter has been issued with the number on instead of the card.
To find out more about
- National Insurance
- How to apply for a National Insurance Number (NINO) if you have not got one or
- How to be reminded of a previously issued number
Q: So why do Student Finance need your National Insurance N
umber and refuse to release your student loans if you do not provide one?
A: Because they need it in order to arrange your loan repayments
When repayment of the student loans became dependent on a student's earnings after they have left their course, the government needed to devise a method of recovering the loans from students income. So as not to reinvent the wheel, the already existing system and process of taking money from employees income used for collecting income tax by Her Majesty's Revenue and Customs was utilised. As the student finance repayments are now income contingent plus the method and organisation used to reclaim it from employee is HMRC, it is often said that repaying a student loan is like taxing a graduate.
Previous students (full-time) who have taken a loan from Student Finance become liable to start repaying in the April after leaving their course and when their income is over the applicable repayment threshold.
If the student is employed then their employer will use the Pay as You Earn system to calculate the correct amount to take from the employees. The employer pass these monies to HMRC who in turn inform the Student Loan Company so that their records can be amended. Students can access information about their repayment record via an On-Line Account
The amount of loan repayment taken each week or month by your employer is based on your income used to also calculate your National Insurance Contributions.
So Student Finance need your National Insurance Number because your student loan repayment is facilitated by the Student Loans Company in partnership with HMRC. The amount deducted from your wages as an employee is linked to your "NICable income". Student Finance avoid paying the maintenance loan unless satisfactory information has been provided to allow recovery of the loan at a later date. This is prudent, given that students can withdraw from a course at any time so the liability to enter repayment is not always years in the future.
As with any student finance matter the process and detail is more complex than this. Different rules exist for certain courses, for those who are self-employed or live overseas after they leave their courses.
If you want to read more detailed information about the repayment of student loans in England and Wales try Repayment of Income Contingent Student Loans Academic Year 20/21
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