How Does Repaying Your UK Student Loan Actually Work?

You will start repaying your student loan on the 6^th April after you finish your course (provided you meet the income threshold, see below). If you are a part time student, you will only begin paying back your student loan four years after you started the course.  

If you’re on Plan 1, the interest rate on your loan will be the Bank of England base rate plus one percent, or the rate on inflation – whichever one is lower.

If you’re on Plan 2, while studying, the interest rate on your loan is the Retail Price Index (RPI) plus three percent. If you earn less than £25,725, your interest rate will then be the current RPI. If you earn between £25,725 and £46,305, your interest rate will be the RPI plus up to three percent (the percentage will rise as your salary rises). If you earn over £46,305, you’ll pay an interest rate of RPI plus 3 percent.

Plan 1 and Plan 2:

Those in either Plan 1 or Plan 2 will currently pay nine percent of any amount you earn over the threshold.

For Plan 1 this is when your income before tax is over £1,577 a month (or £364 a week). This threshold will rise to £1616 from 6^th April 2020. 

For Plan 2 this is when your income before tax is over £2,143 a month (or £494 a week)

Postgraduate Loan:

Those with a Postgraduate Loan will pay six percent of any amount you earn over the threshold.

If you’re on a Postgraduate Loan, you’ll repay when your income before tax is over £1,750 a month (or £404 a week)

Both Plan 1/2 and Postgraduate Loan:

If you have both an undergraduate Plan 1 or Plan 2, as well as a Postgraduate Loan, you will repay 15 percent of whatever you earn over the threshold.

If, for example, you’re earning £30,000 per year – i.e. £2,500 per month before tax.

Under Plan 1, you will pay nine percent of the amount over the threshold, which is £1,577.

£2,500 - £1,577 = £923 * 9% = £83.07 per month

With a Postgraduate loan, you will have to repay six percent of the amount over the threshold, which is £1,750 per month. Using the example above:

£2,500 - £1,750 = £750 * 6% = £45 per month

You can repay your student loan in single payments of £5 or more at any time to the Student Loans Company. Find out more about making extra repayments here.

Plan 1

If you’re on Plan 1 and from England, Northern Ireland and Wales, your debt will be written off when you are 65 years old if you took out the loan before or during the 2005 to 2006 academic year. If you took out the loan in the 2006 to 2007 academic year, or later, your debt will be written off 25 years after the April you were first due to repay.

If you’re on Plan 1 and from Scotland and took out your loan in the 2006 to 2007 academic year or earlier, your debt will be written off when you’re 65 or 30 years after the April you were first due to repay. If you took out your loan in the 2007 to 2008 academic year or later, your debt gets written off 30 years after the April you were first due to repay.

This also applies to postgraduate students from Northern Ireland or Scotland.

Plan 2

If you are on a Plan 2 loan, your loan will be written off 30 years after the April you were first due to repay.

Postgraduate loans

Postgraduate Loans will get written off 30 years after the April you were first due to repay.