A Simple Guide to Student Loan Repayments

Congratulations on acing your degree!

How does it feel to be free from coursework and studying?

What’s next? Are you thinking of going travelling, or securing your dream job?

Whatever your plans, we’ve put together a comprehensive guide to help you through the minefield of student loan repayments.

First things first

How and when you repay your student loan depends on when you went to university and the course you studied.

In this article, we’ll be looking at Student Finance England.

You’ll be on Plan 1 if:

  • You started your course before 1st September 2012.

You’ll be on Plan 2 if:

  • You started your course between 1st September 2012 and 31st July 2023;
  • You’re studying a Postgraduate Certificate of Education (PGCE);
  • You’re studying an undergraduate course;
  • You took out either an Advanced Learner Loan or a Higher Education Short Course Loan; or
  • If you started your course on or after the 1st August 2023 and took out a Higher Education Short Course Loan

You’ll be on Plan 5 if:

  • If you began your course on or after 1st August 2023;
  • You’re studying an undergraduate course OR Postgraduate Certificate of Education (PGCE); or
  • You took out an Advanced Learner Loan.

If you’re studying a postgraduate master’s or doctoral course, you will be on Postgraduate Loan plan.

Still not sure which payment plan you’re on? No problem! You can sign into your student loan online account for further information.

What exactly do I need to pay back?

When you start clearing the balance of your student loan, you must pay back the following:

  • Maintenance loans;
  • Tuition fee loans; and
  • Postgraduate loans.

You won’t need to pay back the following:

  • Other types of student finance, including bursaries and grants.

I left my course early – do I still need to pay back my student loan?

University isn’t for everyone, and the intense studying and prolonged periods away from home can be too much sometimes. If you have made the decision to drop out of university, you are likely to have some questions surrounding your student loan.

Be sure to let your student loan provider know about your change of circumstances as soon as possible.

Even if you did not complete your course, you must still make repayments towards however much student loan you have already borrowed, plus interest. Usually, you will charged for a full term, even if you left part-way through.

You can find further information about this on the Gov.uk website.

Will I pay interest on my student loan?

Yes, you will be charged interest on your student loan. You will accrue interest from when your student loan provider makes your first payment, right up until your loan is either paid off or cancelled.

When will I start repaying my student loan?

You won’t be expected to repay your student loan until your annual income is above the required amount for your individual repayment plan.

As of September 2023, the threshold amounts are as follows:

Plan Threshold Amount for Repayments Per Week Threshold Amount for Repayments Per Month Threshold Amount for Repayments Per Year Interest
Plan 1 £423 £1,834 £22,015 6.25%
Plan 2 £524 £2,274 £27,295 7.3%
Plan 5 £480 £2,083 £25,000 7.3%
Postgraduate Loan £403 £1,750 £21,000 7.3%

Please be aware that the threshold changes every year on the 6th April.

In terms of timeframes, the very earliest you will start repaying your student loan is the April after you finish your course. If your course is longer than four years, you’re studying part-time, or you’re doing a Postgraduate Doctoral course, your repayments will begin the April four years after your course started.

On Plan 5? Your repayments will begin no earlier than April 2026.

Will I still make student loan repayments if I stop working?

If you stop working, or your income drops below the repayment threshold for your plan, your student loan repayments will be automatically stopped.

How are student loan repayments made?

Your repayments will be taken out of your salary. This will be shown on your payslip in the same way as tax and National Insurance deductions.

If you’re self-employed, your repayments will be worked out by HM Revenue & Customers (HMRC) from the information on your tax return.

You may wish to keep track of the progress of your repayments – you can monitor this by logging into your online account.

It’s always a good idea to keep copies of your payslips too, for future reference.

Can I pay my student loan off early?

Yes, you are more than welcome to pay your student loan off early, and the good news is that there is no penalty for doing so!

In what situation would a student loan be cancelled or written off?

Many student loans are eventually written off if they are not fully repaid within a certain timeframe.

Plan When your loan could be written off
Plan 1
  • 25 years after the April you were first due to make your repayments (if you were paid your first loan on or after 1st September 2006).
  • When you’re 65 (if you were paid the first loan anytime prior to 1st September 2006).
Plan 2
  • 30 years after the April you were first due to repay.
Plan 5
  • 40 years after the April you were first due to repay.
Postgraduate Loan
  • 30 years after the April you were first due to repay.

If you claim certain disability benefits, there is a chance that your loan may be written off early. In order for the Student Loans Company (SLC) to consider this, you will need to provide your Customer Reference Number and evidence of your disability.

What happens if somebody dies while repaying their student loan?

In the incredibly unfortunate event that somebody passes away with an outstanding balance on their student loan, the Student Loans Company (SLC) will need to be notified as soon as possible. You will need to provide evidence (for example, a death certificate) and the deceased’s Customer Reference Number. The SLC will then be able to cancel the loan so that no further repayments will be required.

Some final words

Trying to get your head around student loan repayments can be tricky, what with so may different plans to decode and think about! We hope our guide has provided a clear insight into the next steps towards repaying your loan.

Whether you’ve bagged the job of a lifetime or are off on a backpacking adventure around the globe, we wish you every success for the future!

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Representative example: Amount of credit: £1000 for 12 months at £123.40 per month. Total amount repayable of £1,480.77 Interest: £480.77. Interest rate: 79.5% pa (fixed). 79.5% APR Representative. We’re a fully regulated and authorised credit broker and not a lender