Many of you may have been to university and fear the day that Student Finance will come knocking at your door, asking you to repay that rather hefty student loan. This blog will aim to target the most common questions that we are asked regarding student loans and will concentrate on students that studied in England, Northern Ireland and Wales as the rules vary slightly for Scotland.

1. Many of you may have been to university and fear the day that Student
Finance will come knocking at your door, asking you to repay that rather hefty
student loan.
This blog will aim to target the most common questions that we are asked regarding
student loans and will concentrate on students that studied in England, Northern
Ireland and Wales as the rules vary slightly for Scotland.
“When do my repayments start?”
The amount you are required to pay back is dependent on what Plan you are on and
your total yearly threshold or gross income.
A common misconception about student loans is that once this threshold is reached,
you will be charged a percentage of your entire earnings.
Instead, you will only be required to pay back a certain percentage on any earnings
OVER the threshold – again this is dependent on that type of plan you are on.
“How do I know what Plan I am on?”
1. Plan 1 StudentLoan
This loan is applicable to students who would have started their undergraduate
course before the 1st September 2012.
Those of you on this plan will be required to make repayments towards your student
loan once your annual salary exceeds £18,935 (£1,533 per month & £354 per week).
 Plan 2 Student Loan
This loan is applicable to students who would have started their undergraduate
course after the 1st September 2012.
Those of you on this plan will be required to make repayments towards your student
loan once your annual salary exceeds £25,725 (£2,144 per month & £495 per week).

2.  Postgraduate Loan
This loan is applicable to those of you who would have taken out an additional loan
to help with course and livings costs whilst you studied for a master’s course.
Those of you on this plan will be required to make repayments towards your loan
once your annual salary exceeds £21,000 (£1,750 per month & £404 per week).
“How much will I need to repay?”
Plan 1 & 2 Student Loan 9% on earnings over the threshold
Postgraduate Loan 6% on earnings over the threshold
For example:
Bob started University in 2000 and took out a Plan 1 student loan – after graduating
in 2003 and starting working for his new employer immediately, by 2018 he was
earning £50,000 gross per annum.
£50,000 – £18,935 threshold = £31,065
£31,065 x 9% = £2,796
Per month = £233
Jess started University in 2012 and took out a Plan 2 student loan – after graduating
in 2015 and starting working for her new employer immediately, by 2019 she was
earning £30,000 per annum.
£30,000 – £25,725 threshold = £4,275
£4,275 x 9% = £385
Per month = £32
“How does the interest on my loan work?”
Unfortunately, like all loans, interest will be charged on the amount borrowed from
the day the first payment is made to you. This interest rate is based on the retail
price index which takes into account changes in the general cost of living in the UK.
The amount of interest charged is generally calculated at a fixed 3% plus RPI for
Plan 2 & postgraduate loans.

3. The amount of interest is reviewed every September when the new academic year
begins.
Postgraduate Loan Currently charged at 1.75%
Plan 2 & Postgraduate Loan Currently charged at 5.40%
“When will my loan be written off?”
Plan 1:
1. If you took out the loan before 2006 then any outstanding balance will be written off
when you turn 65.
2. If you took out the loan between 2006-2012 then any outstanding balance is written
off 25 years after the April you were first due to repay.
Plan 2 & Postgraduateloans:
Any outstanding balance is written off 30 years after the April you were first due to
repay
“What if I am employed?”
If you are employed, your employer will deduct and collect any student loan
payments and will send them off to the relevant provider each time that you receive
your salary – be that weekly, monthly, every fortnight etc.
Payments will automatically stop if your total income falls below the designated
threshold.
If at the end of the year you have paid some of your student loan but your income
does, in fact, fall below the threshold, you will be entitled to a refund.
“What if I am self-employed”
If you are self-employed, however, you will be required to state on your return which
plan you are on and HMRC will calculate what you owe in repayments – or your
accountant will calculate it for you.
If you have already made repayments through a salary/employer in the year HMRC
will deduct this from the total amount you are required to repay.