When do you start paying back your student loan?
Student loans are offered via the Student Loans Company, a government-owned organisation, to support higher education students with the cost of getting a degree or postgraduate qualification. Money is loaned to cover annual tuition fees, which are paid directly to the university, and you can also get a 'maintenance loan' to help towards living costs.
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.
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