Student Loan Repayments Explained
Understanding how student loan repayments work in the UK and their impact on your salary
Types of Student Loans in the UK
The UK has different types of student loans, each with their own repayment terms and thresholds:
Plan 1 Loans
- For students who started their course before 1 September 2012
- Repayment threshold: £22,015 per year
- Repayment rate: 9% of income above the threshold
- Interest rate: RPI + 1% (currently 6.25%)
Plan 2 Loans
- For students who started their course between 1 September 2012 and 31 July 2023
- Repayment threshold: £27,295 per year
- Repayment rate: 9% of income above the threshold
- Interest rate: RPI + up to 3% (varies with income)
Plan 4 Loans
- For Scottish students
- Repayment threshold: £27,660 per year
- Repayment rate: 9% of income above the threshold
- Interest rate: RPI + 1%
Plan 5 Loans
- For students who started their course from 1 August 2023
- Repayment threshold: £25,000 per year
- Repayment rate: 9% of income above the threshold
- Interest rate: RPI + 0%
How Repayments Work
Student loan repayments are automatically deducted from your salary through the PAYE system if you're employed. If you're self-employed, you'll need to make repayments through your Self Assessment tax return.
Key Points About Repayments
- Repayments only start when your income exceeds the threshold for your plan
- Repayments are calculated on your gross income before tax
- You can make voluntary repayments at any time
- Loans are written off after 25-30 years (depending on your plan)
Impact on Take-Home Pay
Student loan repayments can significantly affect your take-home pay. For example:
- On a Plan 2 loan with a salary of £30,000, you would repay £243.45 per year (£20.29 per month)
- On a Plan 1 loan with a salary of £25,000, you would repay £268.65 per year (£22.39 per month)
Calculate Your Student Loan Repayments
Use our salary calculator to see how student loan repayments affect your take-home pay:
Try Our Salary CalculatorImportant Considerations
- Student loans don't affect your credit score
- Repayments stop if your income falls below the threshold
- You can check your balance and make voluntary repayments through the Student Loans Company website
- If you move abroad, you must inform the Student Loans Company and may need to make repayments directly