When do you start paying back your student loan?
The student loan system has changed over the years as governments have repeatedly tinkered with it. As a result there are now four different student loan plans and one postgraduate loan plan running, all with different rules, rates of interest and thresholds for when you must start repaying them. They are labelled plan 1, 2, 4 and 5. Plan 3 is a postgraduate loan.
Worryingly, 45pc of students in the latest National Student Money Survey said they don't fully understand their student loan agreement.
Here, Telegraph Money explains when you will start paying back your student loan – whatever plan you're on – plus what interest rates you'll be facing.
When do you start paying back your student loan?
For most student loan plans, repayments will automatically be triggered if your income (before tax) goes over the weekly or monthly threshold for your plan. The threshold amounts change on April 6 every year, so it's worth keeping tabs on them if you haven't started repaying yet.
Broadly speaking, the plans work as below:
You will be on plan 1: if you started your course before Sept 1 2012.
You will be on plan 2: if you started your course between Sept 1 2012 and July 31 2023.
You will be on plan 4: if you applied to Student Awards Agency Scotland (regardless of whether it was an undergraduate or postgraduate course)
You will be on plan 5: if you started your course on or after Aug 1 2023.
Thresholds for 2024-25 are as follows:
Plan 1 student loan: over £480 a week, £2,082 a month or £24,990 a year.
Plan 2 student loan: over £524 a week, £2,274 a month or £27,295 a year.
Plan 4 student loan: over £603 a week, £2,616 a month or £31,395 a year.
Plan 5 student loan: over £480 a week, £2,083 a month or £25,000 a year.
The earliest you will start repaying is either the April after you leave your course, or the April four years after the course started if you're studying part-time and your course is longer than four years.
If you're on plan 5, the earliest you'll start repaying is April 2026.
If an annual bonus or overtime triggers loan repayments to start, then don't worry because you can ask for a refund if at the end of the tax year your annual income was less than the yearly threshold for your plan.
When student loans are written off
One quirk of the student loan that you won't get with a bank loan is that if the balance isn't paid off by a certain date then your debt is written off and the loan account closed. Depending on your loan plan the total debt is cancelled at different times.
For plan 1: the loans are written off 25 years after the April you were first due to repay if you were paid the first loan on or after Sept 1 2006. If you received the loan before that date, the loans for your course will be written off when you are 65.
For plan 2: any outstanding debt will be written off 30 years after the April you were first due to repay.
For plan 4: the loans are written off 30 years after the April you were first due to repay if you were paid the first loan on or after Aug 1 2007. If you had the money beforehand, the debt will be wiped when you're 65, or 30 years after the April you were first due to repay – whichever comes first.
For plan 5: the loans are written off 40 years after the April you were first due to repay.
For plan 3 postgraduate loans: These will be wiped 30 years after the April you were first due to repay.
The latest government forecasts predict that about 65pc of full-time undergraduates starting in the academic year of 2023-24 will repay them in full.
This is more than double the forecast for the year of 2022-23, which stands at 27pc, because of reforms to student loan repayments for new students.
Student loan repayments
Once your annual income exceeds the thresholds for repaying you will pay 9pc of the income you earn over the threshold to the Student Loan Company (SLC).
If you are on more than one plan type – and don't have a postgraduate loan – you will need to repay 9pc of your income over the lowest threshold out of all the different plan types that you have.
Student loan interest rates
Interest starts accumulating from the day you take out your loan, and rolls up until the day you pay off the loan – or it's written off.
Student loan interest rates are generally linked to inflation. Since inflation can move up or down, interest rates will too. Again, the exact rate that your loan is charged at will depend on your plan.
Interest rates in 2024-25 are outlined in the table below (unless a lower cap is applied):
How do you repay your student loan?
The payments are taken automatically through your employer's payroll system – before income tax is calculated – as soon as the relevant threshold is exceeded.
If you are self-employed, you will calculate what you owe in tax and student loan repayments as part of your annual self-assessment tax return at the end of each tax year.
Student loan repayments are due on Jan 31 following the end of the tax year, along with your income tax. So, for the tax year ending April 5 2025, your student loan payment will be due on Jan 31 2026.
Student loan FAQs
What happens to my student loan if I move abroad?
If you are already repaying your student loan then you must continue making student loan repayments, if you are eligible to do so. You will need to get in touch with the SLC and inform them of your move. It will then take over the collection of the repayments. Thresholds may be different so you need to understand the rules depending on where you are moving and for how long.
What if I drop out of university?
Your level of maintenance loan will be reassessed based on the number of days you attended your course. If there is an overlap and some of your loan runs into the period after you've left, this would be regarded as an overpayment and you'll need to repay it straight away. If you are not able to repay the SLC can offer a repayment plan.
If you are planning to return to your course then you might not have to repay straight away. The SLC might allow you to use the amount you were overpaid as a credit to be taken off your student finance payments when you come back.
You will need to repay some of the tuition fee loan (once you start earning enough), with the amount depending on when you leave your course. You will need to pay back 25pc of the loan for the year if you suspend or leave in the first term, 50pc of the loan for the year if you suspend or leave in the second term, and all the loan for the year if you suspend or leave in the final term.
Can I repay my student loan sooner?
The rules allow you to make extra repayments towards your student loan at any time to help pay it off sooner. These will be in addition to the monthly repayments you must make when your income is over the threshold amount for your repayment plan.
There is no penalty if you make extra repayments, and you can choose how these extra repayments are applied to the loan – it can either go towards reducing the total balance of your loan or if you have more than one plan you can nominate a specific plan and direct your payments to reducing that particular balance.
It's worth remembering that once you make the overpayment, you cannot get that money back.
If you want to pay off your loan in full, contact the SLC for a 'settlement amount' that tells you exactly how much you owe up to a certain date.
It's important to check when your loan term finishes if you are considering making overpayments. If the date is in sight then you might not benefit from making extra repayments or clearing the loan, because it will be written off at the end of the loan term.
Seek professional help from a financial adviser if you're unsure whether it's worth making extra repayments or clearing the loan.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Telegraph
13 hours ago
- Telegraph
How to tell if it's worth getting a wind turbine in your garden
Domestic heat pump uptake surged in the past year, while solar panels – despite a slight slump – are still the runaway leader for renewable energy installations. Homeowner appetite for wind power, however, is down in the doldrums. This is despite Ed Miliband's mass expansion plan for Britain's onshore wind infrastructure, which could involve relaxing planning laws for home installations. The industry's accreditation body, the MCS Foundation, wants homeowners and farmers to be given the right to install 30m turbines without the need for planning permission. But with high installation costs and limited output, is wind power a financially sound investment for your home? Telegraph Money delves into the details. Types of domestic wind turbines Is there a demand for domestic wind turbines? Other costs and upkeep When will you break even? How to boost the money-making potential Do I need planning permission? How much wind power do you need? Could height restrictions change? Types of domestic wind turbines There are two types of turbines that can be installed at domestic properties, with costs varying considerably. They are nowhere near the size of commercial turbines you see out at sea or in clusters on land. Roof-mounted turbine Installed on top of the property's roof or on the gable end, this type of turbine has the advantage of height. However, the top of the turbine cannot be more than 15m off the ground. They are smaller than standalone turbines, so the power is limited. Expect to generate a maximum of two kilowatts (kW) of electricity a day, against the average UK home usage of 8kWh. You'll therefore need to top up your energy from your existing grid supplier. Costs range from around £1,500 to £3,000. Pole-mounted turbine Free-standing turbines work best in a large, open place that's exposed to the wind. They can generate around 6kW of electricity. Those installed via permitted development rights (more on this later) cannot exceed 11.1m in height, but others granted with planning permission can be larger. Costs vary widely depending on the size. For a 1.5kWh turbine, the typical cost is between £7,000 and £10,000. For a 5kW free-standing model, £25,000 is the ballpark figure, while a large 15kW machine will set you back around £70,000. Is there a demand for domestic wind turbines? Since a de facto ban on onshore wind was lifted by Labour a year ago, only a handful of applications for domestic turbines have been submitted. A revolution in small-scale onshore wind has failed to materialise, and experts doubt it will ever become reality. Oxford University's Prof Jan Rosenow, who has advised Ofgem, said: 'Small wind turbines in gardens rarely make sense because of poor wind conditions, low output, high costs, noise, maintenance needs, and better alternatives like solar. 'They're more of a novelty or a statement piece than a practical energy solution for most homeowners.' Ryse Energy, a manufacturer, said more than half of its new enquiries are from customers looking to combine wind with an existing solar panel system at their home to provide year-round energy security (solar predominantly in the summer, and wind in the winter). Other costs and upkeep Aside from the purchase, it also costs to have the turbine installed at your property. Figures from Checkatrade show the price tags can be hefty. The average installation cost for a roof-mounted wind turbine is £1,000, while installing a free-standing wind turbine – where foundations are required – can jump upwards of £5,000. You will need to undertake maintenance checks every few years, at a cost of around £200. The inverter may also need to be replaced during the turbine's lifespan. For a typical 5-6kW domestic turbine, this will cost around £1,000. Additionally, batteries for off-grid energy storage need to be replaced around every five to 10 years. This can also be a four-figure bill. When will you break even? With the purchase being a significant outlay, it will likely take more than a decade to recoup the initial investment. According to Greenmatch, a 1.5kW turbine costing £7,000 will take 14.5 years to break even. A medium-power 5kW turbine will take 18 years, while the large 15kW machine will break even in 15 years. Having recouped your money, you can then enjoy generating electricity essentially free of charge. However, this will most likely be a short-lived period as turbines typically have a lifespan of 20 years before they need replacing. Maximilian Schwerdtfeger, of adviser group The Eco Experts, said: 'For most consumers, a roof-mounted domestic wind turbine on its own will generate between 200kW and 1,000kW of energy a year, which is not enough to make a significant dent in their bills. 'For example, the average three-bed house uses about 2,700kWh of electricity a year. 'What it can do, however, is generate electricity that you can store in a battery to be either used later or exported back to the grid. 'The largest stand-alone wind turbines are only really suited for farms or properties with a lot of land, although these could potentially generate enough energy to cut your bills down to nothing.' How to boost the money-making potential To boost revenue, you can sell excess energy – if you have any – back to the grid. The Smart Export Guarantee (SEG) scheme is a power-selling scheme introduced in 2020 by the Government. This means you get paid for every unit of electricity you feed back to the grid. Your home will need an export meter and a Microgeneration Certification Scheme (MCS) certificate. It will also likely need to have a smart meter capable of providing half-hourly export readings. Providers have to buy everything you sell, but they can set the price themselves and it does vary, so you should look into which one is best for you. The provider you buy your grid power from may offer you a better export deal. For example, Octopus buys power for 15p/kWh for existing customers and 4.1p for new customers. As most small-scale domestic wind turbines will not generate enough power to leave you with excess electricity, the perks of this scheme are limited. SEG is better suited for homeowners with solar panels. Last year, only 19 new turbines were hooked up to the SEG scheme, compared to 283,597 solar installations. The average domestic turbine supplying power back to the grid had a capacity of 50.4kW, with a total of £37,851 paid to homeowners in return for the excess power. The two properties with turbines less than or equal to 4kW capacity received an average of just £17 from the SEG scheme last year. Meanwhile, the 12 properties with turbines between 10kW and 50kW in power received average payments of £2,029 for their excess electricity. How much wind power do you need? Typically, a wind speed of six meters per second is the minimum average speed for a domestic wind turbine to be considered viable. It is the equivalent of a 13mph wind, so with the average UK wind speed coming in at around 9mph last year, the feasibility for a residential turbine in most areas is low. That's without bringing nearby obstructions into the equation, such as trees and buildings, which further hamper turbine wind speeds. Across the UK, renewable wind generation fell by 13pc in the first three months of 2025 due to near record low wind speeds. Do I need planning permission? Rules vary across British nations, with Wales and Northern Ireland having the tightest planning permission laws for turbines. In England, permitted development rights allow a wind turbine to be mounted on to a detached house or an outbuilding without planning permission, if these criteria are met: You don't already have an air source heat pump at the property No part of the turbine, including the blades, protrudes more than 3m above the highest part of the roof, excluding the chimney, or be more than 15m off the ground Blades are at least 5m above ground level, and no part of the turbine is within 5m from the site boundary It is not on land designated as a Scheduled Monument or within the curtilage of a listed building, a National Park, an Area of Outstanding Natural Beauty, an area designated under s41(3) of the Wildlife and Countryside Act, the Norfolk Broads or a World Heritage Site The turbine complies with MCS standards or equivalent. Similar rules apply for stand-alone wind turbines, but these can be installed via permitted development rights within the garden of any house or block of flats. The main difference is the highest part of the turbine must not exceed 11.1m in height. Could height restrictions change? The 11.1m rule is what MCS wants the Government to change by increasing the limit to 30m – which is the height of the Christ Redeemer statue and 1.5 times the height of the Angel of the North. MCS argued that permitted development rights already allow for mobile phone masts to reach 30m in height in non-protected areas and up to 25m in protected areas. Richard Tice, deputy leader of Reform UK, said his party would 'not tolerate' the introduction of 30m domestic turbines. He said: 'Allowing the tripling of wind turbine heights in residential areas is outrageous. This relentless net zero push will trash property values and turn our towns and villages into industrial eyesores.' The National Farmers Union has backed calls for tweaks to planning law. Tom Bradshaw, president of the NFU, said a change 'would cut unnecessary red tape' and allow farmers to 'make the most of clean energy opportunities'. 'Many farmers already generate renewable energy on-site, but access to a reliable power source remains a barrier,' he said. The Government has signalled that height restrictions could be altered in the future. The Department for Energy Security and Net Zero (DESNZ) said evolutions in onshore wind turbine technology and increased demand for small-scale onshore wind turbines 'may allow for an update' to planning laws last reviewed in 2011. A public consultation on loosening the rules will be launched by the end of the year.
The Sun
2 days ago
- The Sun
Could you be owed £1,000s in overpaid loans? 15-minute check to get a hefty refund
FORMER University students could be owed £1,000s in overpaid loans - here is how to check if you can get a refund. In the last tax year, over one million third level education leavers overpaid their student loans, according to figures released by the Student Loans Company (SLC). 1 But there are a number of reasons you may have been overcharged on your loan. According to MoneySavingExpert, this includes beginning to repay the loan during some months, despite not earning enough in the full year. You are only required to pay your loan back once your income exceeds a certain annual threshold. This varies depending on what type of plan you were on when you started university. There are five plans in total. For example, those on Plan 1, who attended university between 1998-2011 are required to earn a minimum of £26,065 before they begin paying back their loan. Minimum earnings thresholds vary from plan to plan, with those on Plan 2 who attended university between 2021-22 being required to earn £28,470 before they start making repayments. The blog said that if your earnings vary throughout the year, i.e. if you received a bonus, this could lead you to start making repayments before you are actually required to. Another reason you may have overpaid is if you were put on the wrong plan. This can happen if you filled in the student loan section of the HM Revenue & Customs (HMRC) starter checklist form wrong. Martin Lewis reveals little-known suncream tip You can check which plan you are on by visiting the website. Alternatively, you may be overcharged if you began repaying your loan too early or you had money deducted after the loan was fully repaid. How to get a refund if you have overpaid If you think you have been overcharged, you can get the money back and there a few ways you can go about this. The blog said that former students who began repaying the loan despite not meeting the earnings thresholds can request a refund online. This is done via the government's Student Loan Company (SLC) online portal. To do this, you will need to sign in to your online repayment account and select 'request a refund'. Once you've requested a refund through your online account, it will be processed in 28 days. The money will get paid into your bank account. It is also worth nothing that this only applies for tax years up to 2023-24. More ways to claim Alternatively, students can speak to their employer or call the SLC. This may be applicable if you entered the wrong plan when filling out an HMRC starter form. Ahead of your call, you can check what plan you are on in your online account and download an 'active plan type letter". You can call on 0300 100 0611 to discuss the matter with the SLC. You can also call the helpline if you began repaying your loan too early. The MSE blog said: "When you get through, explain your situation and ask to reclaim the money you're owed. "To make the process smoother, before ringing see if you can dig out any old payslips, your payroll number, and/or your PAYE reference number." There is no restriction on how far back you can claim, so if you think you may have been affected years ago you can still ring up. If you had money deducted after the loan was fully repaid, HMRC should pay you back this money automatically, Readers of the blog have claimed back as much as £3,773 by using these methods. One said: "Thank you so much. I knew something wasn't right when I lodged my tax returns and reading Martin's article was the catalyst for a sustained attempt to work out what had happened. I received £3,773 back." While another said the process only took 15 minutes. They explained: "I spent 15 minutes on the phone and got £555 back for overpayments on my student loan. "Most was because of my maternity leave. Thanks so much, couldn't have come at a better time." How student loan plans work If you wish to attend university you may take out a loan to help cover the costs. The loan is paid directly to the university or college on your behalf. Repayments start from the first April after you finish or leave your course. You repay 9% of your income above the repayment threshold. This means that the majority or basic-rate taxpayers lose 37p for every £1 they earn above the threshold - 20p as income tax, 8p as national insurance and 9p for a student loan. Your repayment threshold will vary depending on when you studied at university. Interest is charged on your loan from the day you receive the first payment until it is repaid in full. How the different student loan plans work HERE'S the rules and repayment thresholds for all the different student loan plans: Plan one You're on Plan 1 if you're: an English or Welsh student who started an undergraduate course anywhere in the UK before 1 September 2012 a Northern Irish student who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998 an EU student who started an undergraduate course in England or Wales on or after 1 September 1998, but before 1 September 2012 an EU student who started an undergraduate or postgraduate course in Northern Ireland on or after 1 September 1998 You'll only repay when your income is over £382 a week, £1,657 a month or £19,895 a year (before tax and other deductions). Plan two You're on Plan 2 if you're: an English or Welsh student who started an undergraduate course anywhere in the UK on or after 1 September 2012 an EU student who started an undergraduate course in England or Wales on or after 1 September 2012 someone who took out an Advanced Learner Loan on or after 1 August 2013 You'll only repay when your income is over £524 a week, £2,274 a month or £27,295 a year (before tax and other deductions). Plan four a Scottish student who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998 an EU student who started an undergraduate or postgraduate course in Scotland on or after 1 September 1998 You'll only repay when your income is over £480 a week, £2,083 a month or £25,000 a year (before tax and other deductions). Postgraduate loan an English or Welsh student who took out a Postgraduate Master's Loan on or after 1 August 2016 an English or Welsh student who took out a Postgraduate Doctoral Loan on or after 1 August 2018 an EU student who started a postgraduate course on or after 1 August 2016 If you took out a Master's Loan or a Doctoral Loan, you'll only repay when your income is over £403 a week, £1,750 a month or £21,000 a year (before tax and other deductions).
Telegraph
6 days ago
- Telegraph
The document that can save expat retirees thousands
When you finally quit the workforce, you want to make the very most of your free time and live the best life you can. For some this means heading for sunnier climates, perhaps to a villa overlooking the glittering Mediterranean or one with views of rolling hills in Tuscany. There were 480,906 recipients of the British state pension living in the European Union as of August 2024, according to the latest figures from the Department for Work and Pensions (DWP). Many of them may be spending on expensive private health insurance while they live abroad – but one document could mean they can access NHS levels of free healthcare. Here, Telegraph Money explains everything you need to know about the S1 form and what it entitles you to. This guide will cover: What is the S1 form and who should use it? How and when to make an application How to use an S1 Healthcare when you're visiting the UK Do you still need health insurance while living abroad? Does the S1 cover spouses? What is the S1 form and who should use it? An S1 form, also known as a certificate of entitlement, provides access to state-provided healthcare in an EU country, as well as Iceland, Liechtenstein, Norway or Switzerland – with the healthcare costs covered by the UK. You can use it if you're retiring to one of these countries, as long as you're eligible to receive a UK state pension. This is because the state pension is classified as an 'exportable benefit'. There are others, too – meaning you may also be eligible for an S1 if you're eligible for UK benefits while on maternity, paternity or adoption leave and living in a qualifying country. It can cover healthcare for your dependants, too. In this instance, you'll need to fill out form CA8454. However, as of 2021, you're no longer able to get a new S1 form on the basis of receiving the following: Disability living allowance Personal independence payment Carer's allowance Attendance allowance. If you had an S1 form issued before Jan 1 2021, you'll continue to be covered while you're still receiving these benefits, and you may still be able to renew an existing S1 form too.
