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How repayments are calculated

 

How much you will repay

You will have money taken off your salary to repay your student loan during any pay period where your earnings before tax are over the weekly or monthly threshold.


By pay period, we mean each time you receive your salary. This could be every:

  • Week
  • Two weeks
  • Four weeks
  • Calendar month

The earnings threshold is:

  • £325 a week
  • £1,409 a month
  • £16,910 a year

You pay 9% of anything you earn over the threshold.


For example, if you are paid monthly and earn £1,750 before tax per month you would repay 9% of the difference between what you earn and what the threshold is:

£1,750 - £1,409 = £341


9% of £341 = £30


So your student loan repayment would be £30 a month.


Example repayment amounts

Income each year before tax Monthly salary Monthly repayment
Up to £16,910 £1,409 £0
£17,045 £1,420 £1
£21,000 £1750 £30
£24,000 £2000 £53
£27,000 £2250 £75
£30,000 £2500 £98

If your income changes during the year

If your income changes, either rising or falling, your repayment amounts will automatically change to reflect this.


Making repayments despite earning under the annual threshold

You may still have to make student loan repayments when you earn below £16,910 a year.


This will happen if your salary goes above the weekly or monthly threshold during any given pay period.


For example, if you are paid weekly and normally earn less than £325 (the weekly threshold), you wouldn’t have to repay. But if you did an extra shift or received a bonus which took your pay above £325 for that week, you would make a repayment as it is over the threshold.


If your income is equal to or below £16,910 in any one tax year, you will be entitled to apply to us at the end of that tax year for a refund of your student loan repayments if you wish.


Unearned income

If you have unearned income of more than £2,000 a year, for example interest on stocks, shares or savings, you may have to make additional student loan repayments.


HM Revenue & Customs will advise you if you need to make any payments directly to them in respect of student loans once they have assessed any Self Assessment tax return you submit to them.


I have a plan 1 and a plan 2 loan, how do my repayments work?

The amount you repay to each type of loan depends on your income. The table below shows how repayments work when you’re repaying both a plan 1 and a plan 2 loan.

Your income Amount paid to plan 1 loan Amount paid to plan 2 loan Total monthly amount paid to all loans
Up to £16,910 (the plan 1 income threshold) £0 £0 £0
£18,000 £8 per month £0 £8 per month
£21,000 (the plan 2 income threshold) £30 per month £0 £30 per month
£25,000 £30 per month £30 per month £60 per month
£32,000 £30 per month £83 per month £113 per month

Repayments made from your income between £16,910 and £21,000 will be applied to your Plan 1 loan balance. Repayments from your income above the £21,000 threshold will be applied to your Plan 2 loan balance.

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