Douglas Olsen
Students from Scotland who have taken out a loan to fund their studies in the UK will be on a Plan 4 student loan. Interest on the amount owed is linked to inflation and is calculated daily from the date the loan started. The interest rate for Plan 4 loans was 4.3% in 2025. Students will start repaying their loan the April after they leave college or university, provided their annual salary is over the threshold of £32,745. They will then pay 9% of their income over the threshold to the Student Loan Company.
| Characteristics | Values |
|---|---|
| Salary threshold | £32,745 |
| Interest rate for Plan 4 | 4.3% |
| Repayment threshold for Plan 4 | Changes on 6 April each year |
| Percentage of income over threshold to be repaid | 9% |
| Postgraduate Loan threshold | £21,000 a year |
| Plan 2 threshold | £2,372 a month |
| Plan 1 threshold | £2,172 a month |
| Interest charged | Linked to the rate of inflation |
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What You'll Learn
Interest on Scottish student loans is linked to inflation
The monthly repayment amount is calculated by dividing the total amount borrowed, plus interest (based on the rate of inflation), by the total number of months over which the loan will be repaid. The repayment threshold for Plan 4 loans changes on 6 April each year, in line with average annual earnings. The threshold has been increasing over time.
Students repay 9% of their income over the threshold to the Student Loan Company (SLC). This percentage remains the same even if the salary increases. The salary threshold is currently £32,745. This means that if a student's income is above this threshold, they will pay 9% of their income towards their loan. If their salary drops below the threshold, their payments will be stopped.
Students are obligated to repay their loans for 30 years after the April following their graduation, or until they have finished paying back the loan, whichever comes first. If the loan has not been fully repaid within this period, the remaining amount will be written off.
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How much you repay depends on your repayment plan
If you are a Scottish student who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998, you will be on repayment Plan 4. This means you will pay 9% of your income over the threshold to the Student Loan Company (SLC). The threshold is currently £32,745. This percentage remains the same even if your salary increases.
If you are a student from England, Wales or Northern Ireland, you can find out more about your repayment plan on GOV.UK. The current interest rate for students on repayment Plan 4 is 4.3%. You can also find out how interest for Plan 4 is calculated on GOV.UK.
If you are a student from England, Wales or Northern Ireland, you can find out about interest rates for other repayment plans on GOV.UK. You must continue making payments to your student loan if you are living or working abroad. Update your employment details on GOV.UK if you are working abroad for three months or longer. The SLC has different thresholds for other countries, and the amount you pay may be more or less than you would normally pay in the UK.
If you took out a student loan between 1990 and 1 September 1998, the SLC can help you find the right organisation to contact. If you are unemployed, you will likely not meet the salary threshold and will not make any repayments. You may choose to make voluntary repayments, but you are not required to.
If you took out your student loan on or after 1 September 1998, repayments will be deducted from your wages. You will see the repayments on your wage slip. You will make repayments if your annual salary is over the current threshold of £32,745. You must speak to your employer if your income is over the threshold and you are not paying student loan payments. If your salary drops below the threshold, your payments will be stopped.
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You must earn over the salary threshold to make repayments
In Scotland, you become eligible to repay your student loan in April, the year after you leave college or university. However, you will only start making payments if your annual salary is over the current threshold of £32,745. This is known as a 'salary threshold'. If your salary drops below the threshold, your payments will be stopped.
The repayment threshold usually changes each tax year and differs for each plan type. For instance, Plan 4 loans are wiped after 30 years or if you become permanently disabled and unfit to work. The threshold for Plan 4 loans is currently £32,745 per year. If you have a Plan 1 or Plan 2 loan, the repayment threshold is different.
If you are self-employed, you will need to budget for student loan payments when you submit your Self Assessment tax return and pay HM Revenue and Customs (HMRC) at the end of January. You may need to repay a portion of your savings interest, pensions, or shares and dividends if your additional income is over £2,000. You will need to repay 9% of that via self-assessment.
If you are employed, your repayments will be taken from your wages. You will see the deductions on your wage slip. If your income is over the threshold and you are not making student loan payments, you must speak to your employer.
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You can make voluntary repayments
In Scotland, you become eligible to repay your student loan in April, after you leave college or university. However, you will only start making payments once your annual income crosses a certain threshold, which is currently set at £32,745. If your salary drops below this threshold, your loan payments will be halted.
If you are employed, your loan repayments will be automatically deducted from your wages and reflected on your wage slip. On the other hand, if you are self-employed, you will need to budget for loan payments when submitting your Self Assessment tax return and making payments to HM Revenue and Customs (HMRC) at the end of January.
While you are generally not required to make loan repayments while unemployed, you do have the option to make voluntary repayments. You can pay off your loan whenever you want, and there is no refund for any extra repayments made. This flexibility allows you to manage your loan in a way that suits your financial situation and preferences.
It's important to note that the rules for Scottish students differ depending on when they started their undergraduate or postgraduate course. If the course started on or after 1 September 1998, Scottish students will be on repayment Plan 4. This means they will pay 9% of their income over the threshold to the Student Loan Company (SLC). The interest rate for Plan 4 loans is subject to change; as of 2025, it is 4.3%.
Additionally, if you have additional income from sources such as savings interest, pensions, or shares and dividends, this will be treated as part of your income for repayment purposes. You will be required to repay 9% of this additional income through self-assessment.
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Your loan will be cancelled if you become permanently unfit for work
In Scotland, students who started an undergraduate or postgraduate course in the UK on or after 1 September 1998 will be on repayment Plan 4. This means that they will pay 9% of their income over the threshold of £32,745 to the Student Loan Company (SLC). This percentage remains the same regardless of any salary increases.
- Your Customer Reference Number
- Photocopies of a letter from a doctor, consultant, or psychiatrist stating that you are 'permanently unfit for work', dated within the last 6 months
- Photocopies of the most recent letter of assessment from the benefits agency, confirming that you receive a disability-related benefit
If you are unable to communicate that you are permanently unfit for work, the SLC can accept information and evidence from a third party with Power of Attorney (POA).
It is important to note that the SLC may also be able to cancel your loan if you claim certain disability benefits. You will need to provide evidence, such as a letter from the benefits agency, along with your Customer Reference Number.
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Frequently asked questions
Yes, interest is charged on student loans in Scotland. The interest rate is linked to inflation and is adjusted in line with the retail price index (RPI). The interest is calculated daily from the date the loan is received and added to the account monthly.
The amount of interest paid varies and is based on your annual income. The Student Awards Agency Scotland provides the most up-to-date information on interest rates.
You become eligible to repay your student loan from the April after you leave college or university. However, you will only start making payments if your annual income exceeds a certain threshold, currently set at £32,745.
Repayments are calculated as a percentage of your income above the threshold, which is typically 9%. The exact amount depends on your income and the loan plan.
Student loans in Scotland are usually written off after 30 years from the April after you leave university or 30 years from when you became eligible to repay, whichever is sooner. Loans may also be written off earlier if you become permanently unfit to work or reach the state pension age (65 as of 2025).
