Savanna Hoffman
The repayment of student loans in the UK depends on a variety of factors, including the type of student loan plan, income, and country of study. Students on Plan 1 will pay 9% of their income over £26,065, while those on Plan 2 will pay 9% of their income over £28,470. The income threshold for repayments is £2,172 per month for Plan 1 and £2,372 for Plan 2. Postgraduate loans, also known as Plan 3, have a threshold of £21,000 per year, with a repayment rate of 6%. Scottish students on Plan 4 will repay 9% of their income above £32,745, while Plan 5 students will not be eligible for repayment until April 2026 and will pay 9% over a threshold of £25,000 per year. Repayments are typically handled by the Student Loans Company (SLC), and interest is charged based on the Retail Price Index (RPI) or the Bank of England base rate.
| Characteristics | Values |
|---|---|
| When do you start repaying your student loan? | When your income is over the threshold amount for your repayment plan. |
| How much do you repay? | You repay a percentage of your income over the income threshold for your type of loan. |
| How often do you repay? | Depending on how often you get paid. |
| What if you have multiple jobs? | You'll only repay your student loan from jobs where you're paid over the threshold for your plan type. |
| What if you are self-employed? | You'll make repayments at the same time as you pay tax through self-assessment. |
| What if you move overseas? | You'll repay directly to the Student Loans Company, and the repayment threshold could be different from the UK. |
| What if you have a Postgraduate Loan? | You'll repay 6% of your income over the Postgraduate Loan threshold and 9% of your income over the lowest threshold for any other plan types. |
| What is the interest rate? | The interest rate is based on the Retail Price Index or RPI, which is normally updated once a year in September. |
| When is the interest charged? | Interest is charged from the day the Student Loans Company makes your first payment until your loan is repaid in full or cancelled. |
| What if your salary drops below the threshold? | Your repayments will stop until you're earning above the threshold again. |
| What if you withdraw from your course? | You'll start paying back your tuition fee loan in the April after you withdraw from your course. |
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What You'll Learn
How much you need to earn before repayment
The amount you need to earn before starting to repay your student loan in the UK depends on your repayment plan and your income. Repayments are calculated as a percentage of your income over the threshold for your type of loan. The income thresholds are different for each plan type and change on 6 April every year.
For example, if you're on Plan 1, you'll start repaying your loan when your income exceeds £2,172 per month or £26,065 per year. If you're on Plan 2, the threshold is £2,372 per month or £28,470 per year. For a Postgraduate Loan, the threshold is £1,750 per month or £21,000 per year.
If you have multiple jobs, you'll only make repayments on the income from the job that pays you above the threshold for your plan type. Your repayments will be based on your income for the whole year, and HM Revenue and Customs (HMRC) will calculate your repayment amount based on your tax return.
It's important to note that if your income drops below the threshold or you lose your job, you won't need to make any further repayments until your income rises again. Additionally, there is no penalty for paying off your loan early, and you can request a refund if you have overpaid.
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What to do if you have multiple jobs
In the UK, you'll start repaying your student loan when your income exceeds the threshold amount for your repayment plan. The threshold amount changes on 6 April every year. You'll repay a percentage of your income over the income threshold for your type of loan, depending on how often you get paid. The income thresholds are different for each plan type. For instance, if you're on Plan 1 and have an income of £33,000 a year, you'll repay £52 per month. If you're on Plan 4 with an income of £36,000 a year, your monthly repayment will be £24.
Now, if you have multiple jobs, your student loan repayments will be based on your income from each job, not your combined income. You'll only make repayments on income from jobs that pay you above the threshold for your plan type. For example, if you have a Plan 2 loan and earn £2,400 a month from one job and £500 a month from another, you'll only repay the loan from the income of the job that pays you £2,400, as it's above the £2,372 threshold.
However, if you submit a tax return, you'll have to pay repayments based on your combined income. So, if you have multiple jobs, it's important to understand how your income from each job contributes to your overall tax liability and student loan repayments.
Additionally, if you're leaving the UK for more than three months, you must inform the Student Loans Company (SLC). You'll be expected to continue repaying your loan unless you can provide proof that your overseas income is below the threshold. Updating your employment details is crucial to avoid building up debt on your account.
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How to get a refund for overpayment
In the UK, you only start repaying your student loan when your income surpasses the threshold amount for your repayment plan. The threshold amount changes on 6 April every year. Your repayment amount is calculated as a percentage of your income over the threshold, and you'll only have a single repayment taken each time you get paid, even if you're on multiple plans.
Now, if you've accidentally overpaid your student loan, you might be eligible for a refund. Here's a step-by-step guide on how to get a refund for overpayment:
- Check your loan balance and repayment plan: Log in to your online account on the Student Loans Company (SLC) website to check your loan balance and identify your repayment plan. Knowing your repayment plan is crucial as different plans have different income thresholds and repayment rates.
- Determine if you've overpaid: Compare your annual income for the previous tax year (6 April to 5 April) with the repayment threshold for your plan. If your income was below the threshold, you've likely overpaid. Additionally, you may have overpaid if you started repayments before you were supposed to or if you were on the wrong repayment plan.
- Contact the SLC: If you believe you've overpaid, you can contact the SLC to initiate the refund process. You can find their contact details on their website. They may ask for your customer reference number (CRN), so have that ready.
- Provide necessary information: During your communication with the SLC, they may request additional information to process your refund. This could include proof of your income, such as payslips or bank statements, and details of your employment and repayment history.
- Wait for the refund: The SLC will review your case and determine if you are owed a refund. If you are eligible, they will process the refund, which may take some time to reflect in your account.
Remember, refunds are typically only available if you accidentally paid too much. If you intentionally overpaid your student loan to clear the debt faster, you cannot claim those payments back. Additionally, if you're a high earner or near the end of repaying your loan, reclaiming overpayments might not save you money in the long run, as loan payments stop once your debt is cleared.
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Interest rates and how they work
Interest rates on student loans only impact the total loan balance. They do not influence the monthly repayment amount, which is determined by the borrower's loan plan, salary, and country of residence. The interest is calculated from the day of the first payment and added to the loan balance each month.
There are five student loan repayment plans for UK borrowers, and each plan has different terms and conditions regarding interest rates. The interest rates are generally set annually on 1 September, using the Retail Prices Index (RPI) from the previous March. The RPI is a measure of inflation that tracks changes in the cost of living in the UK. For instance, the RPI rate of 3.2% was applicable from 1 September 2025 to 31 August 2026.
The interest rates for Plan 1 and Plan 4 loans are based on either the RPI or the bank base rate, whichever is lower. The bank base rate is the official interest rate set by the Bank of England. For the period from 1 September 2024 to 31 August 2025, the interest rate for Plan 1 loans was set at 4.3% as it was lower than the Bank Base Rate +1%.
Plans 2 and 3 have higher interest rates because they include a "real interest rate" of up to 3% on top of the RPI inflation rate. For the period from 1 September 2024 to 31 August 2025, the interest rate for Plan 2 loans varied between RPI and RPI +3%, depending on individual circumstances. Meanwhile, the interest rate for Plan 3 loans was set at 7.3% for the same period.
The interest rate for Plan 5 loans is set at RPI +0%. For the period from 1 September 2024 to 31 August 2025, the interest rate was 4.3%. This rate is subject to any caps to reflect the prevailing market rate.
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What happens if you move overseas
If you are planning to leave the UK to live overseas or in the Republic of Ireland for more than three months, you must inform the Student Loans Company (SLC) as soon as possible. You will be asked to complete an 'Overseas Income Assessment Form', which will require you to provide details of your income and employment status. The SLC will then determine the repayment threshold relevant to the country you are moving to, which may differ from the UK threshold.
Your repayment amount will depend on your overseas earnings. If your overseas income is below the threshold, you may not have to make any repayments. However, if your income is above the threshold, you will be required to make student loan repayments. Typically, you will repay nine per cent of your total earnings over the threshold. It is important to note that your repayment threshold when living abroad may change annually to account for price fluctuations.
If your income changes while you are overseas, you must contact the SLC to reassess your repayments. Similarly, if you return to the UK for more than three months, you must inform the SLC, as your repayment status will revert to that of a UK taxpayer.
Failing to notify the SLC of your move overseas may result in penalties. Your loan account may accrue arrears, which you will be responsible for repaying in addition to your regular repayments. It is important to stay on top of your repayment obligations to avoid building up debt.
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Frequently asked questions
The repayment amount is calculated as a percentage of your income over the income threshold for your type of loan. The income threshold is different for each plan type.
You'll start paying back your student loan in the April after you withdraw from your course. You'll only start paying this back once you're earning over a certain threshold.
You'll only make repayments on the income from the job that pays you above the threshold. If you're self-employed, you'll make repayments at the same time as you pay tax through self-assessment.
