Guidance for England and Wales domiciled students who studied in the UK and EU students who studied in England or Wales.
For taxpayers who took out student loans to fund courses in England and Wales starting on or after August 1998, the repayments of the loan depend on which plan the person is on and their weekly or monthly income.
The amount is collected via payroll (if the person is employed) or tax return (if the person is self-employed) based on a percentage of total income above the earning threshold. The amount collected by HMRC is then paid to the Student Loans Company.
Student loans are categorised as follows:
- Plan 1 loans (or pre-2012 loans)
- Plan 2 loans or post-2012 loans
- Postgraduate Masters loans (PGL).
Plan 1 loans (or pre-2012 loans)
- student loans for maintenance and tuition taken out for Higher Education courses by students who started a course in annual year 2011/12 or earlier (including in August 2012) and:
- completed or withdrew from the course before 1 September 2012; or continued on the same course after 1 September 2012 (without a change to their mode of study); or
- transferred course on or after 1 September 2012 (without a change of mode of study).
The repayments begin on 6 April following graduation (or 6 April following the date the individual leaves / finishes the course if s/he does not graduate). The repayments are only collected where the individual has total income which exceeds the repayment threshold for the tax year:
| Tax year | Repayment threshold |
| 2019/20 | £18,935 |
| 2018/19 | £18,330 |
| 2017/18 | £17,775 |
| 2016/17 | £17,495 |
| 2015/16 | £17,335 |
| 2014/15 | £16,910 |
| 2013/14 | £16,365 |
| 2012/13 | £15,795 |
| 2011/12 and prior tax years | £15,000 |
The interest rate on Plan 1 loans is charged at either the Retail Price Index or the Bank of England base rate plus 1%, whichever is lower. Interest rates can be found here. Interest is added each month from the day of the first payment until the loan has been repaid in full or cancelled.
Plan 2 loans (or post-2012 loans)
- student loans for maintenance and tuition taken out for Higher Education and Further Education courses that started on or after 1 September 2012 (excluding Postgraduate Loans); or
- started before 1 September 2012 and transferred course with a change of mode of study on or after 1 September 2012. In this case, any loans taken out after the student changes study mode are subject to Plan 2 repayment terms.
Those who started studying between 1 September 2012 and August 2015 did not have to start repaying the loan until 6 April 2016, even if the individual dropped out of the course early. Where the course began on or after 1 September 2015, the repayments begin on 6 April following graduation (or 6 April following the date the individual leaves / finishes the course if s/he does not graduate).
| Tax year | Repayment threshold |
| 2019/20 | £25,725 |
| 2018/19 | £25,000 |
| 2016/17 and 2017/18 | £21,000 |
Whilst studying, the interest on Plan 2 loans is charged at a fixed rate being inflation (currently 2.4%) plus 3%. After leaving the course, the interest rate varies depending on the level of the individual’s income on a year-by-year basis.
| Annual income | Interest rate |
| £25,725 or less | RPI (currently 2.4%) |
| £25,725 to £46,305 | RPI (currently 2.4%), plus up to 3% |
| Over £46,305 | RPI (currently 2.4%), plus 3% |
Postgraduate Masters loans (PGL)
- student loans for a contribution to costs taken out for eligible Postgraduate Masters courses that started on or after 1 August 2016
- no repayments needed to be made in respect of a Master’s loan until 6 April 2019, even if the Master’s course ended earlier. After that date, the repayments begin on 6 April after the graduate leaves the course (whether or not it is completed). The repayments are only collected where the individual has total income which exceeds the repayment threshold for the tax year
- currently the threshold for Masters loans is £21,000.
Repayment
Each plan has a threshold for weekly or monthly income. The percentage is:
- 9% of the amount earned over the threshold for Plans 1 and 2
- 6% of the amount earned over the threshold for the Postgraduate Loan.
If a person has a Plan 1 or 2 loan and a Postgraduate Loan, the percentage is 15% of the amount earned over the threshold.
Article from ACCA In Practice