UK Student Finance
An A-Z of Student Finance

Repaying your Student Loan

If you take out a new student loan, or if you took out a student loan to fund a course that started in or after 1998, your repayments will be based on your income. You only start repaying your loan when you earn £15,000 a year.

Income Based Student Loan Repayments

If you started your course in or after 1998, your student loan repayments will be based on your income.

If you earn less than a certain level of income - the ‘repayment threshold’ - you will not be required to repay anything. If you earn above the threshold, you will repay a percentage of the amount you earn over the threshold.

If you started your course before 1998, you will have a different type of student loan.

How much do you need To Earn?

The repayment threshold for student loans, before deductions, is currently:

£15,000 a year

This is equivalent to:

£1,250 per month or

£288 per week

If your income exceeds these amounts, you will be required to make repayments. In most cases, these repayments are collected automatically through the tax system.

Any disability-related benefits you receive will not be counted towards the £15,000 threshold, even if they are taxable. If you receive a disability-related benefit and are permanently unfit for work, your loan will be cancelled.

When do your Repayments Begin?

Your student loan repayments will normally start on 6 April after you graduate, or stop attending your course.

For example:

·        if you graduated in June 2006, your repayments will be due to start on 6 April 2007

·        if you withdrew from your course in November 2006 (prior to an original intended graduation date of June 2008), your repayments will be due to start on 6 April 2007

If the April following your last date of attendance has already passed, your repayments will commence as soon as can be arranged, and you will only make repayments from this point. Repayments will only begin if you earn over the threshold, and will stop if your earnings fall under the threshold.

How are your Student Loan Repayments made?

Student loan repayments are made in one of three different ways, according to what type of employment situation you are in:

·        PAYE (Pay As You Earn): if you are employed, student loan deductions are made automatically from your salary

·        Self Assessment: if you are self-employed, or a combination of employed and self-employed, you will be responsible for calculating and making your own repayments

·        overseas: if you work or are planning to work abroad, you will be required to make a repayment arrangement with the Student Loans Company

Managing your Student Loan

Once you start repaying your student loan, it is possible to

·        repay your loan more quickly

·        get a refund if your total income for the year does not exceed the repayment threshold

·        find out your student loan balance

More than one Type of Student Loan

Student loan repayments based on income were introduced in 1998. For courses beginning before 1998, student loan repayments are based over a fixed loan term (these are sometimes known as ‘mortgage-style’ repayments).

Most people will only have one type of loan. However, if you have borrowed under both repayment schemes, you could have a choice as to which loan you repay first. If you exceed both repayment thresholds, you can obtain further advice by calling the Student Loans Company.

Student Finance Direct and the Student Loans Company

If you applied for student support from 2004 onwards, you will have dealt with Student Finance Direct. This is a service delivery partner of the Student Loans Company, who administers the collection of your student loans via the Income Contingent Repayment Scheme.
 

 

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