When Dan Bunter and his family moved to Kenya at the beginning of 2024, his student debt was the last thing on his mind.
Yet having diligently updated the Student Loans Company on his new circumstances, the 31-year-old discovered that honesty carried a heavy price. His monthly repayments jumped from £180 in the UK to £549 in Nairobi — not because he was earning considerably more, but because the cost of living is considered much cheaper.
“There’s an assumption that you’re going to be able to live this incredibly cheap life,” says Bunter, who works in international development. His salary is about £50,800 but his loan repayments now take away 20 per cent of his net pay.
In the UK graduates with Plan 2 loans — those who started university between 2012 and July 2023 — only begin repaying once they earn £28,470 (rising to £29,385 on April 6). If Bunter earned £50,800 while living in the UK, he would be repaying about £165 a month.
But if a graduate moves abroad, the Student Loans Company applies thresholds calculated using the World Bank’s price level index, a metric intended to adjust for local purchasing power. These thresholds are set by the Department for Education. In a low-income country such as Kenya, the point at which you start repayments is cut to £11,390.
The UK cannot recoup funds through foreign tax offices, so graduates who work overseas must settle their bill via direct debit from their post-tax income. This effectively inflated Bunter’s repayment rate from 15 per cent to 20 per cent of his take-home pay. “They seem to blindly build it based on gross salary,” he said. “But if you’re already paying a third of your gross to the local revenue authority, and then you have this additional tax on your net salary, it’s just crazy.”
Bunter had a debt of £37,654 from his first-class degree in politics and history from the University of Manchester, plus £10,609 for a master’s in international development from the University of East Anglia. The weight of the debt became so great that Bunter was forced to take a personal loan from family to clear the £8,000 left on his postgraduate debt once they moved to Kenya. This reduced his repayments to £325, but he will still have to pay his family back. His outstanding undergraduate debt is £50,272.
He said: “The first year here was a massive struggle just to acclimatise and even work out how we’re going to get on, to be able to put savings away and to look to buy a place. The loan repayments just really push you down and you’re in survival mode every month. The struggle was to the extent that I had to seek some family support.”
The family plan to return to the UK eventually and are paying about £5,300 a year for their eldest child to go to an international school and follow the UK curriculum. Bunter said there were other substantial costs to factor in.
“They’ve just applied a formula and they have not factored in any realistic expatriate costs of living,” he said. “To get good-quality family accommodation you’re looking at around £1,500 a month. Expat housing in Nairobi is often priced higher than local options, reflecting priorities like security and proximity to work and schools.”
Had Bunter breached the terms and conditions set by the Student Loans Company, he would be significantly better off. The company obliges borrowers to disclose whether they are moving abroad and the salary they will be earning. But if it doesn’t receive the salary information it sets a default “fixed monthly repayment” rate, depending on the country. For Kenya, that rate is £154.40 — a fraction of the £549 he is being charged.
The exchange rate also affects his repayments. Bunter is paid in US dollars, but his repayment threshold is set according to the Kenyan shilling and he makes repayments in pounds sterling. “It’s challenging from a planning perspective. Depending on what President Trump wants to do each month the exchange rate is constantly going up and down. So that’s an additional challenge.
“It’s really depressing,” he added. “I never knew that it would impact me in this way.”
A spokesperson for the Student Loans Company said: “All customers are required to comply with the terms and conditions of their loan, which state they that must inform the Student Loans Company if they plan to reside outside of the UK for three months or more. To remain compliant, customers should complete an overseas income assessment form each year and make monthly repayments if they earn over the repayment threshold for their country of residence.”