Savanna Hoffman
If you've taken out a student loan, you're probably wondering when you'll need to start paying it back. The good news is, you won't need to start repaying your student loan until you've graduated and are earning over the repayment threshold. The threshold for student loans is currently £26,065 per year, £2,172 per month, or £501 per week. If you're self-employed, it's your responsibility to calculate and make your repayments. There are also alternative payment plans and options to refinance your loan, which can make your monthly payments more manageable.
| Characteristics | Values |
|---|---|
| When do repayments start? | Student loan repayment doesn't normally start until you've graduated and are earning over the repayment threshold. The repayment threshold is currently £26,065 a year, £2,172 per month, or £501 per week. |
| What if I leave my course early? | You still have to repay your student loan if you leave your course early. Grants and allowances are also normally due to be repaid if you leave your course early or are overpaid. |
| What if I have multiple sources of income? | If you have two jobs or are self-employed, you will be responsible for calculating and making your own repayments. |
| What if I work abroad? | If you work or plan to work abroad, you will be required to make a repayment arrangement with the Student Loans Company. You will need to provide proof of overseas income, and you will continue repaying your loan at the rate for the country you've been living in if you don't update your employment details upon returning to the UK. |
| How do I make repayments? | Repayments can be made in your online account and by card, bank transfer, or cheque. |
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Repayment thresholds
If you are on a Plan 1, Plan 2, or Plan 4 loan, your repayments are due at a rate of 9% on your earnings over the repayment threshold per tax year. The repayment threshold is different for each plan. For example, for the 2025/26 academic year, you will repay 9% of your earnings over £26,065 per year.
If you are repaying a postgraduate loan, your repayments are calculated differently from Plan 1, Plan 2, or Plan 4 loans. Repayments for Plan 5 loans will first start from April 2026.
The mechanics for how and when you repay your student loan are the same regardless of your loan plan. Repayments are typically made through the tax system, and you can repay your loan online or by card, bank transfer, or cheque. If you have two jobs or are self-employed, you will need to follow specific guidelines for repaying your loan.
If you are outside the UK for more than three months, you must inform the Student Loans Company (SLC) and may need to make repayments directly to them. You will need to provide proof of your overseas income to ensure it is below the threshold.
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Repayment start dates
Repayments for student loans usually start the April after you graduate or leave your course, or the April four years after the first day of your course, whichever comes first. This means that if you are still studying four years after the start of your course, your repayments will begin, even if you have not yet graduated. If the April following your last date of attendance has already passed when you do graduate or leave your course, your repayments will start as soon as they can be arranged.
Your repayments will only begin if your income is over the repayment threshold. The threshold amount changes on 6 April each year. For example, the threshold before deductions is currently £26,065 a year, which is £2,172 per month or £501 per week. If your income exceeds these amounts, you will be required to make repayments. If your income falls below the threshold, your repayments will stop.
How you repay your loan depends on your employment situation. If you are employed, student loan deductions will be made automatically from your salary. If you are self-employed, or a combination of employed and self-employed, you will be responsible for calculating and making your own repayments. If you are working or planning to work abroad, you will need to make a separate repayment arrangement with the Student Loans Company.
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Multiple jobs
Repaying student loans can be confusing, and having multiple jobs adds another layer of complexity. Here is some information on repaying your student loan when you have multiple jobs in the UK:
If you have multiple jobs, your student loan repayments are calculated based on each job's income individually, not your combined income. This means that you will only make repayments on income from jobs that pay you above the threshold for your loan type. For example, if you have a Plan 2 loan and earn £2,400 per month from one job and £500 per month from another, you will only make repayments on the income from the first job as it is above the Plan 2 threshold of £2,372 per month.
Self-Assessment and Tax Returns
However, it is important to note that if you need to submit a tax return, you will pay repayments based on your combined income. This may be the case if you have multiple jobs with high earnings, as mentioned in the example above, where your total income could be over £100,000 per year. In such cases, you may be required to pay repayments on your entire income, regardless of the individual job thresholds.
Loan Types and Thresholds
The threshold and repayment percentage depend on the type of loan you have. Plan 1 and Plan 2 loans have different thresholds and repayment rates. Postgraduate loans also have their own threshold of £1,750 per month. Understanding your loan terms is crucial to knowing how much you need to repay and when.
Alternative Options
If you need more time or want to explore other repayment options, there are alternatives available. You may be able to postpone or reduce your payments through deferment or forbearance options. Loan consolidation is another alternative, where you combine multiple loans into a single loan with a fixed interest rate, simplifying your repayments. Income-driven repayment plans are also available for federal student loans, adjusting your monthly payment based on your earnings.
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Self-employment
If you are self-employed, you will need to start repaying your student loan through self-assessment. The plan you are on will determine when you have to pay back your loan and the different income thresholds you will be charged against.
For example, if you are on Plan 1 (Scottish and Northern Irish students who took out loans from 1 September 1998 onwards) you will start paying your loan back when your annual salary exceeds £24,990. If you are on Plan 2 and your earnings for the tax year fall below £27,295, you won't need to pay anything. The threshold amounts change on 6 April every year.
When you complete your tax return, you can check a box to show that you have a student loan. HMRC will then let you know how much of your loan you need to pay. You can also use accounting software to estimate how much student loan you will be liable to pay.
Student loans are not a tax-deductible benefit for self-employed people. However, you can make extra repayments if you are in a position to do so.
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Refinancing
Student loan refinancing is when you take out a new private loan to pay off your existing loans. Refinancing can help you secure a better deal if you qualify for a lower rate. You may qualify for a lower rate if market rates have dropped or your credit score has improved. You can also choose a longer term to reduce your monthly payments or a shorter one to save on interest. However, if you refinance federal loans with a private loan, you will lose access to federal protections and benefits, such as income-driven repayment plans and loan forgiveness. Therefore, if you decide to refinance federal loans, you should have stable finances and emergency savings.
When refinancing, you should compare refinancing options side by side to find the best interest rate and the right fit for you. You will typically need a credit score of at least the high 600s, a steady income, and enough income to cover your expenses, student loan payments, and other debts. You may also choose to apply with a co-signer to improve your chances of approval or secure better terms.
It is important to note that refinancing may cause you to pay more interest over the life of the loan. Additionally, you may lose certain benefits that come with your current loans, such as autopay discounts or loyalty rewards. Therefore, you should carefully consider your financial goals and compare the rates, repayment terms, and monthly payments of different lenders before selecting a refinancing option.
Student loan refinancing can be a smart way to simplify your debt and reduce the amount you pay over time. It can help you save money by replacing your existing debt with a new, lower-cost loan through a private lender. However, it is crucial to understand the difference between refinancing and consolidation. While refinancing involves taking out a new private loan, consolidation combines multiple federal loans into a Direct Consolidation Loan through the federal government, allowing you to retain federal benefits.
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Frequently asked questions
Your student loan repayment normally starts on 6 April after you graduate or stop attending your course. If you've graduated, you'll only need to start repaying your loan when your income is over the threshold amount for your repayment plan.
The threshold amounts change on 6 April every year. You'll need to repay a portion of the amount you earn over the threshold. For example, as of 2024, you'll only repay when your income is over £501 a week, £2,172 a month or £26,065 a year.
If you're self-employed, you'll be responsible for calculating and making your own repayments.
Alternative payment plans could offer a better repayment option for your situation. Student loan deferment is a common way to extend your student loan payments. You can also consider student loan refinancing, which can make your monthly payments more manageable.
