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Student Loan Repayments Guide

We know, student loans are one the most complicated parts of University life. But also, you want to make sure you know everything you can about student loans, which plan you are on, the interest rates, how to calculate your repayments and everything else.

There’s a lot to figure out, but your student loan is what’s going to get you through your time at Uni. So it’s worth learning how you’re going to repay the thing.


What Is A Student Loan?

You kind of know what a student loan is, but the detail can be pretty complicated on the surface to understand. This guide will give you a full rundown of everything you need to know, in easy to understand bitesize chunks.

In short though, your Student Loan includes both your Tuition Fee Loan and/or your Maintenance Loan. Your Tuition Fee Loan is used for your University Course Fees, and your Maintenance Loan is to help with your rent and living costs.

When thinking about Student Finance repayments, they will only start once you have left your University, and you’ll only ever have to pay the loan off when you earn above a certain amount.


Your Student Loans Account

Firstly, if you need to know where to find all the information about your own student loan, visit the official Gov.uk Website to manage your loan. Here you can check your balance and find out how much your total student loan is, and how much you have paid off.


Which Student Loan Plan Am I On?

When you start paying your loan back, the amount of interest you’re charged on your loan, depends on which Student Loan Plan you are on. You are automatically enrolled on a plan when you sign up for a Student Loan, and it depends on what country you are studying in, and the date in which you study.

Student Loan Plan 1

You will be on Student Loan Plan 1 if you are an undergraduate students who started their course in England or Wales before September 2012, or in Northern Ireland after September 1998.

Student Loan Plan 2

You will be on Student Loan Plan 1 if you started your undergraduate course after September 2012 in England or Wales.

Student Loan Plan 4

You will be on Student Loan Plan 4 if you are a Scottish student who studied anywhere in the UK starting their undergraduate course after September 1998, and also EU students who studied in Scotland after September 1998.


How Much Will I Repay?

How To Calculate How Much You Owe

Calculating student loan repayments can be a pretty complicated thought. There are student loan calculators out there, which will do the math for you, like the Gov.uk Student Loans Calculator or StudentCalc.co.uk but it’s always worth double checking with the details below, and in your Gov.uk Student Loans Portal.

Student Loan Repayments

As a general rule each plan has a minimum earnings threshold which depends on your income once you graduate. If you don’t earn over this threshold, you don’t have to worry about paying anything back yet! Those who do, can expect to pay back:

  • Plans 1, 2 & 4: 9% of the amount you earn over the threshold
  • Postgraduate Loan: 6% of the amount you earn over the threshold

What Is The Student Loan Threshold?

UK Student Loans are not treated like private debts, and are taken directly from your pay, a bit like a tax. And they are only deducted from your wages, once you meet a minimum earnings threshold. Payments are also worked out based on your income, increasing and decreasing only as your wages increase and decrease.

  • Plan 1: £388 a week, £1,682 a month, or £20,195 a year
  • Plan 2: £524 a week, £2,274 a month, or £27,295 a year
  • Plan 4: £487 a week, £2,114 a month, or £25,375 a year

What Is The Interest on UK Student Loans

Although you will only ever start paying back your student loan, once you have graduated, interest starts being added to the amount you borrow when you actually start university, from the moment you receive your first payment in your first year. Interest will carry on being applied until the day you clear your balance.

UK Student Loan Interest Rates aren’t set up as just a simple flat rate, they are based on the Retail Price Index (RPI). The Retail Price Index is a measure of inflation, which measures changes to the cost of living in the UK. You can find out what the Retail Price Index currently is by Clicking Here. So as the cost of living can go up or down, so can the Retail Price Index. Resulting in student loan interest rates can too.

Interest Rates for Plan 1

The Student Loan Plan 1 Rate of Interest you are charged is the lowest of either: the Retail Price Index (RPI), or the Bank of England base rate plus 1%.

UK Student Loan Interest Rates aren’t set up as just a simple flat rate, they are based on the Retail Price Index (RPI). The Retail Price Index is a measure of inflation, which measures changes to the cost of living in the UK. You can find out what the Retail Price Index currently is by Clicking Here. So as the cost of living can go up or down, so can the Retail Price Index. Resulting in student loan interest rates can too.

Interest Rates for Plan 2

The Student Loan Plan 2 Rate of Interest you are charged is the Retail Price Index (RPI) plus 3%.

For Plan 2 Loans, the Department of Education keeps an eye on interest rates set by commercial banks. At times, a temporary loan interest rate cap might be put in place to make sure you are not being charged a higher interest rate than the average found in the commercial market.


Interest Rates for Plan 4

The Student Loan Plan 4 Rate of Interest you are charged is the lowest of either: the Retail Price Index (RPI), or the Bank of England base rate plus 1%.


Repaying Your Student Loan

When Do I Repay My Student Loan?

If you’re wondering when to repay your student loan, we have the answers. The earliest you’ll start repaying your loan is April, once you have finished your course. You’ll also only ever repay your student loan when your income is over the threshold amount for your repayment plan.

Your repayments will automatically stop, if you stop working or your income goes below the threshold amount.

How Do I Repay My Student Loan?

Student Loan Debt is different from other types of loans and debt. Loan repayments are automatically deducted from your salary, before you get paid. Just like National Insurance & Taxes, repayments are automatically taken off your wages, before you receive them, so you’ll never have to worry about missing a payment.

Should You Repay Your Student Loan Early?

Some think clearing their student loan debt off early is a weight off their shoulders, and it does make sense. But as mentioned before, student loan debt is different to other types of debt. Firstly, student loans have some of the best repayment terms you will ever encounter, especially when compared to other commercial loans. Their interest rates you are charged are based purely on what you can afford and your earnings. Other banks & loan providers don’t take this into consideration.

There is also a chance your loan could get written off before you complete all your payments to wipe the debt clean! You’ll never be able to predict how much you’ll earn once you graduate, so it’s worth having a good think about whether you want to put your savings towards paying the loan off early. If you are expecting quite high earnings, and can afford to, it might make sense to save interest accrued over time, and pay the debt off early. But for those not too sure, we think it’s better to keep your savings for something else.


When Are Student Loans Written Off?

Student Loans can get written off! Meaning you won’t have to make any more repayments, even if you haven’t paid it all back, which is pretty crazy! The point at which your student debt is written off depends on when you took out the loan, and also which loan plan you are on.

When Are Plan 1 Loans Written Off?

If you started studying in 2005 to 2006 or earlier, your loan is written off when you turn 65 years of age.

If you started studying in 2006 to 2007 or later, your loan is written off 25 years after the April you were first due to pay.

When Are Plan 2 Loans Written Off?

Plan 2 loans are written off 30 years after the April you were first due to repay.

When Are Plan 4 Loans Written Off?

If you started studying in 2006 to 2007 or earlier, your loan is written off when you turn 65 years old, or 30 years after the April you were first due to repay, whichever comes first.

If you started studying in 2007 to 2008 or later, your loan is written off 30 years after the April you were first due to pay.

Is Your Student Loan Written Off If You Move Abroad?

It’s a great idea, but sorry guys, it’s a myth! Moving abroad does not mean you can dodge your student debt. Student Finance will make you pay, and you might incur penalty charges if you try to avoid paying what you owe. Your earnings might change if you are working abroad, and your repayments might reflect this, so it’s always worthwhile keeping Student Finance updated with your current situation and earnings.


Warning! These Terms Are Not Set In Stone

So you know everything there is to know on student loans, you might be wondering can any of this change? It’s impossible to predict when the government will change everything at the blink of an eye, so do your research, and make sure you always know where you stand with your loan.

Pre University: Specific details and figures are changing all the time, so before you sign up to university or any funding sources, please speak to the relevant teams dealing with your applications first.

After University: The terms of your Student Loan can actually change, even after you have signed your contract. Interest rates will obviously change, but earnings thresholds and even loan wipeout times can change.


More Info On Your Student Loans

So that’s everything you need to know about your Student Loans, but things do change all the time. It’s always best to check with Student Finance, and your account details to make sure everything is in check, and you’re not getting into any scary situations with your student debt. Here’s a few links to get any questions you might have answered.


More Advice on Student Finance

We hope you’ve got a bit more of an idea on Repaying Your Student Finance Loans. If you’re looking for more advice and information on Student Finance, check out our Student Finance Guide.