It is important to understand the rules and procedures for repaying a student loan if you borrowed money from the Student Loans Company (SLC).
This section explains when you need to start repaying your student loan, how much the monthly repayments will be, and how to get a refund.
As a student, you will need to pay back anything you borrow from SLC. But, the amount you repay each month will depend on your income - not the amount you borrowed!
You will not have to repay your loan until you finish your course (or leave it) and start earning over a set amount (called the 'repayment threshold').
Thus, earning less than the current threshold means you would not have to repay any of the loan (further details below).
You will have to repay:
Unless you received an overpayment, there is no need to pay back other kinds of student finance (e.g. bursaries, grants). Another section explains repayments of student finance if you suspend or leave your course early.
There are three repayment plans. So, the one that you are on will determine when you start to repay your loan and how much you will pay each month.
If you already have one, you can sign in to your student loan repayment account, to check your balance, make a one-off payment, and:
Note: The information found in this student loan repayment guide is also available in Welsh language (Cymraeg) on the GOV.UK website.
The repayment plan that you are on will determine when you start to repay your student loan (and finish it). The three types of student loan plans are:
You will not need to make any repayments until your income goes over the threshold amount for the plan you are on. But, it is important to be aware that the threshold amounts change every year (on the 6th of April).
Even so, your repayments would stop by automatic process if your income drops below the threshold, or you stop working altogether.
Note: You do not get to choose the repayment plan yourself. Furthermore, having more than one loan could mean you will be on several different plans.
As a rule, you will be placed on Plan 1 if you are (either):
So, being on Plan 1 means the earliest you will start to make repayments will either be:
Note: Based on repaying student loans 2020/21, you will only repay when your income goes over £372 a week or £1,615 a month (before tax and any other relevant deductions).
Note: Full-time students who have taken out a Maintenance Loan from Student Finance Wales can get up to £1,500 written off (i.e. through the Welsh partial loan cancellation scheme).
As a rule, you will be placed on Plan 2 if you are (either):
So, being on Plan 2 means the earliest you will start to make repayments will either be:
Note: Based on repaying student loans 2020/21, you will only repay when your income goes over £511 a week or £2,214 a month (before tax and any other relevant deductions).
Plan 2 student loans do not get written off until 30 years after the April when the first repayment was due.
Note: Full-time students who have taken out a Maintenance Loan from Student Finance Wales can get up to £1,500 written off.
As a rule, you will be placed on a Postgraduate Loan plan if you are (either):
After taking out a Master's Loan, the earliest you would start making repayments would be the April after leaving your course. You will only repay when your income goes over £404 a week or £1,750 a month.
After taking out a Doctoral loan, the earliest you would start repaying is:
You will only repay when your income goes over £404 a week or £1,750 a month (before tax and other deductions).
Note: Taking out a Postgraduate Tuition Fee Loan in Northern Ireland, or a Postgraduate Living Cost Loan in Scotland, means you would need to repay them according to Student Loan Plan 1.
Similarly, Master's Loans and Doctoral Loans do not get written off until 30 years after the April when the first repayment was due.
Note: You receive notification from the Student Loans Company (SLC) when you get close to repaying all of the loan.
You must contact the Student Loans Company (SLC) to inform them about someone who has died so they can cancel the deceased person's student loan. SLC will need some evidence from you, such as:
As a rule, you can cancel your student loan if you are no longer able to work (e.g. permanently unfit to work due to a disability or illness). SLC will need some evidence from you, including.
Note: The YouTube video presented by Student Finance England explains what happens when you finish your course and start repaying your student loan.
The method that you use to repay your student loan will depend on whether you are employed or self-employed (e.g. working for yourself).
You will be able to make voluntary repayments in your online account and by credit card, bank transfer, or by cheque.
It is important to keep some records, such as your payslips and PAYE forms (e.g. P60). You would need them to claim a refund.
The amount you repay will depend on which plan you get placed on and how the threshold applies to your weekly or monthly income. For example, you will repay:
Note: There will be nothing to pay back while your income is below the repayment threshold. But, SLC will add interest to the loan from the date you get your first payment.
The 2020/21 repayment thresholds for Plan 1 are £372 a week or £1,615 a month (before tax and any other deductions). The amounts change on the 6th of April every year.
Currently, the interest charged on Plan 1 is 1.75%. The GOV.UK website has further guidance on how the interest is calculated and applied to Plan 1 student loans.
The 2020/21 repayment thresholds for Plan 2 are £511 a week or £2,214 a month (before tax and any other deductions). The amounts change on the 6th of April every year.
During the time you are studying, the interest rate charged is 5.4%. It combines the Retail Price Index (currently set at 2.4%) plus an extra 3%.
This rate would apply until (either):
Note: Following that, the interest rate will depend on your household income for the current tax year.
As a self-employed worker, your income will be the total income amount stated on your Self-Assessment form. As an employee, your income will be your taxable pay:
What if you have more than one job in a tax year? In this case, the interest rate will be based on the combined income from all your jobs.
The GOV.UK website has further guidance on how the interest is calculated and applied to Plan 2 student loans.
Note: You must keep your contact details in your online account current and accurate (and supply any evidence if SLC ask for it). Failing to do so may mean you get charged the higher rate of interest rate (even if your income is lower).
If you have Plan 1 and Plan 2 loans, you would repay 9% of your income above the threshold of Plan 1. But, the repayments would only go towards the Plan 1 loan if your income is below the Plan 2 threshold.
Furthermore, your repayments would go towards both of your loans if your income is above the Plan 2 threshold.
The Postgraduate Loan thresholds are 404 a week or £1,750 a month. But, you must repay them under Plan 1 if you took out either a Postgraduate Tuition Fee Loan in Northern Ireland or a Postgraduate Living Cost Loan in Scotland.
Interest rate charged on Postgraduate Loans is currently 5.4% (the RPI plus 3%). The GOV.UK website has further guidance on how the interest is calculated and applied to a Postgraduate Loan from England or Wales.
If you have secured a Postgraduate Loan with either a Plan 1 or Plan 2 loan, you would need to repay 6% of your income above the Postgraduate Loan threshold. Besides that, you would also pay back 9% of your income over the threshold for Plan 1 or Plan 2.
It would not be uncommon for your income to change during the year. If so, you can ask for a refund if you are making repayments and your total annual income (from the 6th of April to the following 5th of April) is less than:
Being employed means your repayments will be taken from your salary. But, the repayments would be from the jobs where you are earning above the minimum amount (not your combined income).
HM Revenue and Customs (HMRC) will be able to calculate how much you are repaying from your Self Assessment tax returns.
Repayments will be based on your income for the full year. HMRC will deduct them from the amount you need to repay if you already made repayments from a salary.
Note: The short YouTube video presented by Student Finance England (SFE) explains more about what happens when you finish your course and start to repay your student loan.
As an employee, you will have tax and National Insurance taken out of your salary at the same time as your repayments.
You will see the deductions on your payslips. So, your employer will need to know which of the plans you are on.
Note: Remember, you will not start repaying until your income goes over the minimum amount. You can make voluntary repayments without any penalties if you want to pay off some or all the loan early.
HM Revenue and Customs (HMRC) use your tax return to work out how much you need to pay. You would make any payments owing at the same time as you pay your Self Assessment tax bill.
Your employer is going to deduct loan repayments from your salary if you earn over the minimum amount (as an employee doing a tax return).
Your payslips (or P60) will show how much you have paid off the student loan during the tax year. You will need to include this information when you complete your tax return.
You will be able to see any repayments that you made, and the remaining balance, in (both):
Note: It is important to understand that the tax year runs from the 6th of April to the 5th of April in the following year in the United Kingdom.
You must notify the Student Loans Company (SLC) if you leave the United Kingdom for a period of more than three (3) months. They can then work out whether you need to make repayments while you are overseas - and how much you need to pay.
There will be different repayment thresholds for each country. But, the rules for making repayments are the same as in the United Kingdom.
During the time you spend abroad, repayment amounts will be based on:
Note: You must keep your contact details up-to-date and accurate. Use your online account to update any change in circumstances.
You can choose to make voluntary repayments directly to SLC to pay off your student loan early (without penalty). They would be in addition to the usual repayments made through salary or tax returns.
There are several ways to apply a voluntary repayment to your loan, such as:
Note: The Student Loans Company (SLC) will decide how repayments are applied to your balance unless you make the choice yourself.
Once you sign in to your online account you will be able to:
Note: You can also use the website portal to make an online repayment without actually signing in to an account. It allows you to make a card repayment towards your own loan or for someone else (providing you have their surname and customer reference number).
Use these details to make a voluntary repayment by a bank transfer or by standing order (or to set-up a standing order from a UK bank account):
Student Loans Company
Sort code: 60 70 80
Account number: 10027254
Use these details to transfer money from a non-UK bank account:
NatWest Government Banking Services Branch
Use one of these as a reference for all bank transfers and standing orders:
You should make the cheque payable to 'Student Loans Company Ltd' and write the appropriate customer reference number on the back.
Student Loans Company Ltd
100 Bothwell Street
You can pay your loan off in full (by debit card, bank transfer or cheque) after calling the Student Loan Company to find out:
You will need to supply some documentation, such as (either):
The Student Loans Company
Telephone: 0300 100 0611 (England, Northern Ireland or Scotland)
Telephone: +44 (0)141 243 3660 (outside the UK)
Monday to Friday: 8am to 8pm
Saturday: 9am to 4pm
Telephone: 0300 100 0370 (Wales)
Monday to Friday: 8am to 6pm
Information on call charges
Important: Failing to pay the settlement amount by the settlement date means you would have to call SLC again. The amount owing may have changed. But, you would only need to supply recent payslips or calculations since the last time you called.
There are several reasons for getting a refund on a student loan, such as if:
Note: The Student Loans Company (SLC) will not give a refund on any voluntary repayments.
You can ask for a refund if you believe you repaid your student loan in full and your employer carried on making deductions from your salary.
In this case, the Student Loans Company (SLC) will contact HM Revenue and Customs and ask them to notify your employer. You should allow up to four (4) weeks for the deductions to stop being taken from your salary.
You can ask SLC for a refund if a deduction from your salary occurs before your due date for making repayments.
The Student Loans Company make refunds on repayments if your income over the full tax year was less than:
In some cases, your annual salary may be less and your employer might still deduct repayments (e.g. if you get paid overtime or a bonus).
The rules change for students who are repaying both a Plan 1 and a Plan 2 loan. In this case, you would only get a refund if your income was under £18,935.
SLC provide extra guidance on all previous annual repayment thresholds for Plan 1 and Plan 2 student loans.
Note: You need to give the Student Loans Company (details above) your customer reference number when you ask for a refund.
You will need to update your employment details if the Student Loans Company (SLC) sends you a letter asking you to, or any time you:
Note: SLC use this information to calculate whether you should be repaying your loan. Hence, you could get a higher interest rate if you fail to keep your details current.
Repaying your student loan