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How repayments are calculated

 

How much you will repay

Your employer will take repayments from your salary 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:

  • £336 a week
  • £1,457 a month
  • £17,495 a year

You pay 9% of your income 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 - £1,457 = £293


9% of £293 = £26


So your student loan repayment would be £26 a month.


Example repayment amounts

Income each year before tax Monthly salary Monthly repayment
Up to £17,495 £1,457 £0
£18,500 £1,541 £7
£21,000 £1750 £26
£24,000 £2000 £48
£27,000 £2250 £71
£30,000 £2500 £93

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 £17,495 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 £336 (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 £336 for that week, you would make a repayment as it is over the threshold.


If your income is equal to or below £17,495 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 plan depends on your income. Your employer will carry out one calculation of 9% so only one repayment amount will show on your payslip.


The repayment threshold for Plan 1 is £17,495 and for Plan 2 the threshold is £21,000. So, if you earn less than £17,495 you won’t make any repayments at all.


If your income is between £17,495 and £21,000 you’re repayment will be applied to your Plan 1 loan.


If your income is more than £21,000 your repayment will be spread across your Plan 1 and Plan 2 loans.


The table below shows how repayment amounts are split and applied to each plan type 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 £17,495 (the plan 1 income threshold) £0 £0 £0
£18,000 £4 per month £0 £4 per month
£21,000 (the plan 2 income threshold) £27 per month £0 £27 per month
£25,000 £27 per month £30 per month £57 per month
£32,000 £27 per month £82 per month £109 per month

I have a Plan 1 and a Plan 2 loan, what happens when I pay one plan type off?

When you’ve repaid one of your plan types we’ll write to you to let you know.

If you repay your Plan 1 loan first, you’ll start, or continue, to make repayments towards your Plan 2 loan. Find out more about Plan 2 thresholds

If you repay your Plan 2 loan first, you’ll start, or continue, to make repayments towards your Plan 1 loan. See the weekly, monthly and annual thresholds above.

You’ll only make repayments if your income is over the relevant threshold.

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