How much do I repay?
The amount you repay is based on your income, not what you borrowed. This section explains how much your repayments might be and how much interest will be applied depending on your circumstances.
Working out how much you’ll repay
Your employer will automatically take repayments from your salary if your income, before tax, is over the UK threshold. The current thresholds for repayment are £21,000 a year, £1,750 a month or £404 a week.
You pay 9% of your income over the threshold. For example, if you’re paid monthly and earn £2,250 before tax you’ll repay 9% of the difference between what you earn and what the threshold is:
- £2,250 (salary) - £1,750 (threshold) = £500
- 9% of £500 = £45
- So your student loan repayment would be £45 in that month.
Your payslips will show how much has been deducted. If you’re self employed you’ll pay through self assessment.
The following table gives some examples of what your repayments might be:
|Income each year before tax||Monthly salary||Approximate monthly repayment|
Repayments will be taken if you go over the weekly or monthly threshold at any point in the year, for example if you work overtime or get a bonus. If your income changes, either rising or falling, your repayment amounts will change to reflect this. If you stop working, your repayments will stop until you start working again and your income is over the repayment threshold.
If at the end of the tax year your income has been below £21,000, you can contact SLC to apply for a refund.
Remember, we only receive your repayments from HMRC after the end of the tax year. So it’s important you keep documents such as payslips and P60s so you can monitor your balance.
However, if you plan to go overseas to travel, work or study, you may still need to make repayments direct to us. If you leave your course early, the repayment process might be different.
If you have both a Plan 1 and a Plan 2 loan
If you have loans taken out for a course starting before 1 September 2012 (Plan 1) and for another course starting after 1 September 2012 (Plan 2), you should read the information in What if I have both a Plan 1 and a Plan 2 loan? This will explain how your repayments will be allocated to each loan balance.
If you pay tax through self assessment HMRC will also include unearned income, for example, interest on stocks, shares or savings, if it’s more than £2,000 a year.
If you go overseas
If you’re planning to travel, work or study abroad for more than three months,after you’re due to repay, you must let us know. Your monthly repayments will still be due if your income is above the repayment threshold for your destination country. For more information on how to repay read repaying from overseas
How interest is applied
You‘re charged interest from the day your first payment is made until your loan is repaid in full or cancelled. The interest rate applied to your loan is updated once a year in September, meaning it may increase or decrease.
The interest rate you pay is based on:
- The UK Retail Price Index (RPI) - currently at 1.6%; and
- Your circumstances.
|Circumstance A: While you’re studying|
While you’re studying and until April 6th after you finish or leave your course.
While you’re studying, up until the April after leaving your course or the April four years after the start of your course, whichever comes first.
|Interest:||Retail Price Index (RPI) + 3%|
|Circumstance B: Once you’ve left your course|
|From April 6th after leaving your course until the loan is repaid in full.|
|Interest:||Interest will be based on your income:
|Circumstance C: If you don’t keep your details up to date|
|If you don’t to respond to our requests for information or evidence.|
|Interest:||Retail Price Index (RPI) + 3% will be applied to your loan, whatever your income, until we have all the information we need.|
|While you’re studying||Full-time students – While you’re studying and until 6 April after you finish or leave your course.
Part-time students – While you’re studying, up until the April after leaving your course or the April four years after the start of your course, whichever comes first.
|Retail Price Index (RPI) plus 3%|
|Once you’ve left your course||From 6 April after leaving your course until the loan is repaid in full||Interest will be based on your income:
|If you don’t keep your details up to date||If you don’t respond to our requests for information or evidence.||RPI plus 3% will be applied to your loan, whatever your income, until we have all the information we need.|
The RPI figure will be updated in September based on the RPI figure in March of that year.
If RPI is 1.6% for 2016/17, here are some examples of the interest rate that would apply, based on a range of incomes:
|£21,000||RPI only = 1.6%|
|£31,000||RPI (1.6%) + 1.5% = 3.1%|
|£41,000||RPI (1.6%) + 3% = 4.6%|
Getting charged more than one rate of interest in the same month
This can happen if you have two or more Plan 2 loans for different courses.
For example, if you started and left a course before 6th April 2015 then started a new course after that – and took a loan out for each of those courses – you’d be charged:
- A rate of RPI for the loan from your first course from 6th April after you left the course until 5th April 2016; and
- A rate of RPI + 3% for the loan from your second course until the April after you complete or leave your second course.
Historical interest rate
The following rates, unless otherwise indicated, apply to the period 1st September to 31st August for the years advised.
|2016/17||RPI (1.6%) + 3% = 4.6%|
|2015/16||RPI (0.9%) + 3% = 3.9%|
|2014/15||RPI (2.5%) + 3% = 5.5%|
|2013/14||RPI (3.3%) + 3% = 6.3%|
|2012/13||RPI (3.6%) + 3% = 6.6%|