Douglas Olsen
Student loan repayments in the UK are typically calculated as a percentage of your income over a certain threshold, with payments being made through the tax system. The threshold and repayment percentage vary depending on the repayment plan and the country within the UK. Students from England or Wales may have their Postgraduate Loan written off 30 years after the April they were first due to repay, while Scottish students are on Plan 4 and Northern Irish students are on Plan 1. There are also schemes in place to reduce loan repayments, such as the Student Finance Partial Cancellation Scheme, which can reduce loans by up to £1,500.
| Characteristics | Values |
|---|---|
| When to start repaying student loans | It depends on which repayment plan you're on. |
| Repayment plans | Plan 1, Plan 2, Plan 4 |
| Repayment threshold | The amount varies depending on the plan and the country within the UK. For students in England who started university in 2023 or later, the threshold is £25,000. In Wales, it is £28,470; in Scotland, £32,745; and in Northern Ireland, £26,065. |
| Repayment amount | 9% of the amount you earn above the threshold. |
| Repayment frequency | Monthly repayments. |
| Repayment method | Direct debit or through the tax system (PAYE). |
| Overpayments | Refunds are available if you have overpaid. |
| Loan cancellation | Loans may be cancelled in certain circumstances, such as disability or death. |
| Loan write-off | Loans are typically written off after a certain period, which varies depending on the country within the UK and the loan plan. For example, Plan 1 loans are written off 25 years after the April you were first due to repay, or when you turn 65. |
| Interest | Charged on the loan from the day it is taken out. The interest rate may vary. |
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What You'll Learn
Student loan repayment plans
The repayment plan for your student loan in the UK depends on when you started your course and what type of course you studied. You can check which repayment plan you are on by signing in to your online account and downloading your 'active plan type letter'.
If you have more than one loan, you could be on different plans. For example, if you are on Plan 1 and Plan 2 with an annual income of £26,400, you will be paid £2,200 each month. This is over the Plan 1 threshold of £2,172 but under the Plan 2 threshold of £2,372. In this case, you will repay 9% of your income over £2,172 per month because that is the lowest threshold out of the two plans.
If your income is over the Plan 2 threshold, you will still only repay 9% of your income over the Plan 1 threshold. You will not have to make a separate repayment towards your Plan 2 loan. Your repayments will be taken out of your salary at the same time as tax and National Insurance. Your payslips will show how much has been deducted.
It is important to update your employment details and contact information in your online account, especially if you have multiple jobs or are self-employed. This ensures that you are on the correct repayment plan and that your repayments are calculated accurately.
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Cancelling or writing off your student loan
Cancelling your student loan application
If you have applied for a student loan and no longer need it, you may be able to cancel your application online by selecting to change your application. You may be prompted to complete a change of circumstances form, which you can download and send to the address provided or upload to your online account. This typically takes 11 working days to process, but timescales can vary.
Partial cancellation scheme
The Student finance partial cancellation scheme means you may be eligible for up to a £1,500 reduction on your loan. This applies to students with a maintenance loan for a full-time undergraduate course from 2010/11 or later, with no outstanding charges, costs, expenses or penalties. The money will be automatically deducted from your loan balance once you've made your first repayment.
Repaying your loan early
If you are considering paying off your loan early, it is important to note that there is a chance you may then stop earning over the repayment threshold, die, or become incapacitated, meaning you would have unnecessarily repaid debt that you didn't need to. Similarly, if it is unlikely that you will clear the loan in time, then you will have paid off more than you needed to.
When your loan gets written off
When your student loan gets written off depends on which repayment plan you are on. If you are a full-time student from Wales, you may be able to get £1,500 of your Maintenance Loan written off. Plan 1 loans will be written off 25 years after the April you were first due to repay or when you turn 65. Postgraduate loans for students from England or Wales will be written off 30 years after the April you were first due to repay.
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Student loan overpayments
If you have overpaid your student loan, you can get a refund. You can check your loan balance in your online account. If you have overpaid and have not heard from the Student Loans Company (SLC), you can ask them for a refund.
To avoid overpaying, you can make your last two years of repayments by Direct Debit. If you have less than two years of loan repayments left, you can leave the PAYE scheme and make monthly payments by direct debit instead. You can do this by logging into your SLC account or by calling the SLC.
If you have overpaid, there are a few ways to get a refund. You can contact the SLC with your customer reference number (CRN). You can also call the SLC and spend some time on the phone to get a refund. According to one source, this method took 15 minutes and resulted in a refund of £555.
If you are a student from England or Wales, your Postgraduate Loan will be written off 30 years after the April you were first due to repay. If you are a postgraduate student from Northern Ireland, you are on Plan 1. If you are a postgraduate student from Scotland, you are on Plan 4.
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Student loan interest rates
The interest rate on student loans in the UK depends on which repayment plan you are on. For Plan 1 and Plan 4, the interest rate is 4.3%. For Plan 2, the interest rate varies between RPI and RPI +3%, depending on your circumstances. The applicable RPI rate is 4.3% for the period from 1 September 2024 to 31 August 2025. The interest rate for Plan 3 loans is 7.3% for the same period.
The interest rate for Postgraduate Master's or Doctoral income-contingent repayment student loans is RPI +3%. The applicable RPI rate is 4.3% from 1 September 2024 to 31 August 2025. The interest rate for Mortgage Style loans is also RPI at 4.3% for the same period.
The repayment threshold (how much you need to earn before you start paying) increases every year and is usually based on the RPI inflation rate in March of the previous year. The repayment threshold for Plan 1 loans will rise to £26,065 from 6 April 2025 to 5 April 2026. The income threshold for repayment of Plan 2 loans will rise to £28,470 during the same period.
It is important to note that student loan debts are not included in bankruptcy, debt relief orders (DRO), or individual voluntary arrangements (IVA). Therefore, they are not written off with your other debts. Additionally, when applying for products that require a loan, you may be asked if you have any existing loans, and your student loan may be taken into consideration.
The Student finance partial cancellation scheme means you may be eligible for up to a £1,500 reduction on your loan. To maximize this benefit, you can make a voluntary repayment of £5 as soon as you've received at least £1,500 in a maintenance loan. This will reduce your loan balance and, in turn, lower the interest.
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Student loan repayment thresholds
The amount you repay each month towards your student loan depends on your income and the type of repayment plan you are on. Repayments are linked to your earnings, so the amount you owe in total will not affect your repayments. Instead, the amount you repay per month is calculated based on how much you are earning above the threshold. The threshold varies depending on the type of loan (undergraduate or postgraduate) and where your regional funding body is based in the UK.
For students who normally live in England, Northern Ireland, or Wales, the repayment threshold is £27,295 a year, £2,274 a month, or £524 a week. For Scottish students, the threshold is £25,000 per year. Loan repayments are calculated at 9% of the amount you are earning over the repayment threshold.
If you have taken out a Postgraduate Master's Loan on or after 1 August 2016, or a Postgraduate Doctoral Loan on or after 1 August 2018, the repayment threshold is £21,000 a year, £1,750 a month, or £404 a week. Repayments are calculated at 6% (9% in Scotland and Northern Ireland) of the amount you are earning over the threshold.
If you have a Plan 1 and Plan 2 loan and your income is over the Plan 1 threshold but under the Plan 2 threshold, you will repay 9% of your income over the Plan 1 threshold. You will not have to make a separate repayment towards your Plan 2 loan.
The repayment threshold increases every year, usually based on the RPI inflation rate in March of the previous year.
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Frequently asked questions
You don't need to do anything to start paying off your student loan—the money is taken automatically from your payroll in the same way as tax.
The threshold for students in England who started university in 2023 or later is £25,000. In Wales, it is £28,470; in Scotland, it's £32,745; and in Northern Ireland, it's £26,065.
Yes, you still have to repay your student loan if you leave your course early.
Yes, some people choose to make extra repayments to clear their loan early. There is no penalty for doing this.
You can get a refund for overpayments. Check if you're entitled to a refund on the SLC website.
