What if I have both a Plan 1 and a Plan 2 loan?
Information on repaying if you have both a Plan 1 and a Plan 2 loan.
Your plan type
There are two different repayment plan types, Plan 1 and Plan 2.
Understanding the plan type is important as it determines the income level you start repaying your loan and the interest rate which applies. The plan type(s) you are on can’t be changed.
If you have a loan for a course starting from 1 September 2012, you’ll have a Plan 2 loan. However, if you’ve previously taken a loan for a course which started before 1 September 2012, you’ll also have a Plan 1 loan.
How much you’ll repay
The amount you repay to each plan type depends on your income. Your employer will carry out one calculation of 9% so only one repayment amount will show on your payslip.
The income threshold for Plan 1 is £17,775. The income threshold for Plan 2 is £21,000.
So, if you earn:
- Less than £17,775: You won’t make any repayments at all.
- Between £17,775 and £21,000: Your repayment will be applied to your Plan 1 loan.
- 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 paid to both loans|
|Up to £17,775
(Plan 1 income threshold)
|£18,000||£1 per month||£0||£1 per month|
(Plan 2 income threshold)
|£24 per month||£0||£24 per month|
|£25,000||£24 per month||£30 per month||£54 per month|
|£32,000||£24 per month||£82 per month||£106 per month|
The interest rate will be the Retail Price Index or 1% above the highest base rate of a nominated group of banks (Bank Base Rate), whichever is lower. The interest rate is set on 1 September each year, although changes can also happen during the year. For more information visit www.studentloanrepayment.co.uk
The amount of interest charged is based on the rate of inflation (March RPI) and will vary depending on your circumstances. For more information see How much do I repay?
Coming to the end of repayments
After the end of the tax year, HMRC let us know how much you’ve repaid through the tax system for that financial year. As we only receive this annually, it’s likely you’ll repay more than you owe.
To prevent this, you can switch to repaying by direct debit, if you estimate you’ll repay your loan within two years. This is an easier and more accurate way to repay.
However, if you have both a Plan 1 and a Plan 2 loan you can’t change to direct debit repayments until one type of loan has been paid off in full. Once you have paid off one plan type you can then change to direct debit repayments in the last two years of the remaining plan.
If you think you’re eligible contact us on: 0300 100 0611 (Mon to Fri 8am – 8pm or Sat 9am – 4pm).
If you’re overseas then call +44 141 243 3660