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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:

  • £480 a week
  • £2,083 a month
  • £25,000 a year

You pay 9% of your income over the threshold


How to work out your monthly repayment amount

For example, if you are paid monthly and earn £2,400 before tax per month you would repay 9% of the difference between what you earn and what the threshold is:


£2,400 - £2,083 = £317

9% of £317 = £28

So your monthly student loan repayment would be £28.


Example repayment amounts

Annual income before tax Monthly salary Monthly repayment
Up to £25,000 £2,083 £0
£27,000 £2,250 £15
£30,000 £2,500 £37
£35,000 £2,916 £74
£40,000 £3,333 £112

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 £18,330 and for Plan 2 the threshold is £25,000. So, if you earn less than £18,330 you won’t make any repayments at all.

If your income is between £18,330 and £25,000 your repayment will be applied to your Plan 1 loan.

If your income is more than £25,000 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 £18,330 (the plan 1 income threshold) £0 £0 £0
£19,000 £5 per month £0 £5 per month
£23,000 £35 per month £0 £35 per month
£25,000 (the plan 2 income threshold) £50 per month £0 £50 per month
£27,000 £50 per month £15 per month £65 per month
£30,000 £50 per month £37 per month £87 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.

I have a Plan 2 and Postgraduate Loan, how do my repayments work?

The amount you repay to each type plan depends on your income.

You’ll repay:

  • 9% of the amount you earn over the Plan 2 repayment threshold (£25,000)
  • 6% of the amount you earn over the Postgraduate Loan repayment threshold (£21,000)

The table below shows how repayment amounts are split and applied to each plan type when you’re repaying both a Plan 2 and Postgraduate Loan.

INCOME (before tax) REPAYMENT
Annual Monthly Plan 2 loan Postgraduate Loan Total monthly repayment
£21,000 £1,750 £20 £0 £20
£23,000 £1,916 £0 £9 £9
£27,000 £2,083 £0 £19 £19
£27,000 £2,250 £15 £30 £45
£30,000 £2,500 £87 £45 £132

The Postgraduate Loan repayment plan only applies to students who took out a Postgraduate Loan from Student Finance England (SFE) or Student Finance Wales (SFW). If you took out a Postgraduate Loan from Student Awards Agency Scotland (SAAS) or Student Finance Northern Ireland (SFni) then these will be repaid under Plan 1.

More information is available on Postgraduate Loan repayments.

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