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Plan 2 - 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
  • Four weeks
  • Calendar month

The earnings threshold is:

  • £403 a week
  • £1,750 a month
  • £21,000 a year

You pay 9% of your income over the threshold


How to work out your monthly repayment amount

  1. Take away £21,000 from your annual salary before tax
  2. Work out 9% of the remainder
  3. Divide that figure by 12
  4. Round down to the nearest pound

For example, if you were earning £30,000 per year:

  1. 30,000 – 21,000 = 9,000
  2. 9% of 9,000 = 810
  3. 810 / 12 = 67.5
  4. Round down

So your monthly student loan repayment would be £67.


Example repayment amounts

Annual income before tax Monthly salary Monthly repayment
Up to £21,000 £1,750 £0
£22,000 £1,833 £7
£25,000 £2,083 £30
£30,000 £2,500 £67
£35,000 £2,916 £105

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 your 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. See the weekly, monthly and annual thresholds above.

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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