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Plan 1 - Frequently asked questions

 
 

Income based loans

What is an income based loan?

An income based loan is money that you borrowed to help with your studies.


This could have been a Maintenance Loan to help you with your day-to-day costs, or a Tuition Fee Loan paid by us, on your behalf, to your university or college to cover the costs of your tuition fees. You have to pay these loans back.


This type of loan is also known as an Income Contingent Repayment (ICR) loan.


If you received any additional grants or bursaries you do not pay these back.


Can my income based loan be written off?

Yes, there are different rules for loan write-off depending on where you normally lived when you entered university or college and when you took out your first loan.


When your loan will be written off


If you took out your loan when you lived in: It will be cancelled if you:
England or Wales - Before 1st September 2012
  • took out your first student loan in or before academic year 2005/06, then it will be cancelled when you turn 65; or
  • took out your first student loan in or after academic year 2006/07, then it will be cancelled 25 years after you became eligible to repay
Scotland
  • took out your first student loan in or before academic year 2006/07, then it will be cancelled when you turn 65; or
  • took out your first student loan in or after academic year 2007/08, then it will be cancelled 35 years after you became eligible to repay
Northern Ireland
  • took out your first student loan in or before academic year 2005/06, then it will be cancelled when you turn 65; or
  • took out your first student loan in or after academic year 2006/07, then it will be cancelled 25 years after you became eligible to repay

If you receive a disability-related benefit and are permanently unfit for work, we can cancel the loan. However, we cannot cancel a loan unless we receive medical confirmation together with evidence of your disability benefit.


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Your loan balance

How can I find out how much I still owe?

You can login to your student loan repayment account using the login link on this page, and use the Balance Calculator to work out how much you have left to pay.


You will need to have details of:

  • all deductions that have been taken from your pay; and
  • any repayments you have made to HM Revenue & Customs through Self Assessment

since we were last advised of your repayments through the tax system.


If you have not logged in to your account before, visit the section about how to use your online account.


What should I do if I think I have paid off my loan since I received my last statement?

You should contact us with details of all the deductions that have been taken from your pay, or that you have paid to HM Revenue & Customs since the date of your last statement.


If you have a Plan 1 loan and a Plan 2 loan, and from the information you give us you have repaid one plan type, we’ll request that your employer only makes deductions based on the remaining plan type threshold.


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Repayment of your loan

How do I repay my income based loan?

Your repayments are normally collected through the tax system by HM Revenue and Customs (HMRC).


This will either be:

  • through the Pay As You Earn (PAYE) scheme if you are the employee of a company; or
  • directly to HMRC through Self Assessment.

What is Pay As You Earn (PAYE)?

This is where your employer deducts a student loan repayment directly from your pay slip. For more information, see the section on Repaying through PAYE


What if I pay tax through Self Assessment?

If you are self-employed you will be responsible for calculating and paying your student loan repayments to HM Revenue & Customs. For more information, see the section on Repaying through Self Assessment


How much do I repay?

You will repay 9% of anything you earn over the income threshold.


The UK income threshold is:

  • £17,495 before tax per year
  • £1,457 before tax per month
  • £336 before tax per week

For example, if you earn £1,650 per month, you would pay 9% of £173, or £17 per month to your student loan.


Please see the section on Overseas thresholds for information about income thresholds in other countries.


Can I make additional repayments?

Yes. You can make additional repayments by credit or debit card at any time, directly to us, by using the Make a Payment service.

For more information about other methods of repayment available, visit the Payment options section.


What happens if I change employer?

If you change employer, your new employer may ask which repayment plan type you have, Plan 1 or Plan 2, to set the correct threshold and to work out any repayments deductions based on your income. Your plan type can be found on any recent correspondence. You can also work it out yourself byanswering these questions

 

How do I repay if I am living overseas?

If you are employed overseas or are outwith the UK tax system you will make student loan repayments directly to us. For more information, see the section on income based loan repayment from overseas


What should I do if I think I have nearly paid off my loan?

You can login to your student loan repayment account using the login link on this page, and use the Balance Calculator to work out how much you have left to pay.


If you are within a few months of paying your loan off in full, or if you have already paid it off, you should contact us with details of all the repayments you have made since the date of your last statement.


Claiming back student loan repayments if you earned less than the annual repayment threshold

It is possible that you had a student loan deduction in a pay period where you earned over the monthly or weekly threshold, but over the whole year your income did not exceed the annual repayment threshold. This might happen if you receive a bonus payment or work overtime.

In this situation you will be able to apply to us for a refund of the repayments you have made in that year. However, we will not make a refund unless you ask for one.

You may decide you do not want a refund, in which case you will pay off your loan more quickly and pay less interest on the outstanding balance.

 

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. Find out more about Plan 1 thresholds

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

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Overpaying your student Loan

You will be entitled to a refund if you overpay your loan. We will only be able to authorise a refund either:

  • Once HMRC confirms your total earnings and student loan repayments at the end of the tax year; or
  • You send us your pay slips showing your student loan deductions for the current tax year.

 

What if I have repaid too much and have a credit balance?

If you have a credit balance we’ll write to you and ask you to contact us.

The following table explains interest on credit balances and refund options based on your plan type(s).


Plan type Credit interest
Plan 1 only You’ll accrue credit interest on your refund amount for up to a maximum of 60 days
Plan 2 only
Plan 1 and Plan 2 – both plan types have a credit balance refund available
Plan 1 and Plan 2 – one plan type in credit, one with outstanding balance
  • You can request the refund or use it to reduce the balance on your other outstanding student loan(s).
  • We’ll automatically allocate the credit balance to your outstanding plan type balance if we haven’t heard from you within 60 days of the date on your letter.
  • You’ll only gain interest on the refund amount for up to a maximum of 60 days

 

Student Loan deductions and Occupational Pensions

If you are in receipt of an occupational pension that is not subject to Class 1 National Insurance Contribution (NIC) deductions, your pension payer should not take any student loan deductions.

Student loan deductions should only be made from income that is subject to Class 1 National Insurance Contributions at the point of payment. If you are unsure what kind of pension you are being paid you should ask your pension payer for information. The pension payer will however still have to deduct income tax in the normal way.

The only time an occupational pension could attract student loan amounts would be if you are required to complete an annual Self-Assessment (SA) Tax Return for HM Revenue & Customs and the total of all your unearned income exceeds £2,000.

 

Interest on your loan

What is the current interest rate?

The interest rate on on Income Based Loans can be found on the Interest Rates page.

Why have I been charged interest?

Interest is applied to student loans from the moment you receive your first payment until your loan is paid off in full.

How and when is the interest rate decided?

The interest rate is set by the Department for Education (DfE) each year. It is normally based on the Retail Price Index each March and takes effect from the September of that year.

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