What Are The Student Loan Plan Types In The UK?
A student loan is something most people get when they attempt to go to university.
But when it comes to repayment on these student loans, the rules differ depending on what student loan plan type you’re on.
This is because there are numerous plan types in the UK which mean different things for different people.
If you are looking for ways to pay back your student loan, Prograd's algorithm helps you come up with a plan to maximise your earnings.
In this article, we’ll go through the different student loan plan types in the UK and help you understand what that all means for you and your repayments. Let’s get started.
The Student Loan Plan Types In The UK
Let’s have a look at the various student loan plan types in the UK.
Plan 1
Interest: 6%
Payback: 9% over threshold
Who Is On This Plan?
- English and Welsh students starting their courses before September 1, 2012.
- Northern Ireland students starting on or after September 1, 1998
- EU students studying in England or Wales if they started their course on or after September 1, 1998, but before September 1, 2012.
- EU students studying in Northern Ireland if they started studying on or after September 1, 1998.
When do you start repaying?
If you’re earning £22,015 a year (£423 a week/ £1,834 a month) before tax and other deductions, then you are expected to start repaying your Plan 1 loan.
Plan 2
Interest: 7.1%
Payback: 9% over threshold
Who Is On This Plan?
- English, Welsh, and EU students studying in England and Wales that started studying on or after September 1, 2012.
When do you start repaying?
If you’re earning £27,295 a year (£524 a week/ £2,274 a month) before tax and other deductions, then you are expected to start repaying your Plan 1 loan.
Plan 4
Interest: 6%
Payback: 9% over threshold
Who Is On This Plan?
- This only applies to Scottish and EU students studying in Scotland, having started their studies on or after September 1, 1998.
When do you start repaying?
If you’re earning £27,660 a year (£532 a week/ £2,305 a month) before tax and other deductions, then you are expected to start repaying your Plan 1 loan.
Plan 5
Interest Rate: Based on Retail Price Index
Payback: 9% over threshold
Who Is On This Plan?
- UK students who started studying in 2023.
When do you start repaying?
If you’re earning £25,000 a year (£480 a week/ £2,083 a month) before tax and other deductions, then you are expected to start repaying your Plan 1 loan.
Postgraduate Loan
Interest: 7.1%
Payback: 6% over threshold
Who Is On This Plan?
- English and Welsh students who took out a Postgrad Master’s Loan on or after August 1, 2016. It also applies to Postgrad Doctoral Loans taken out on or after August 1, 2018.
- EU Students who started their postgrad course on or after August 1, 2016.
When do you start repaying?
If you’re earning £21,000 a year (£403 a week/ £1,750 a month) before tax and other deductions, then you are expected to start repaying your Plan 1 loan.
Repayment Example
To make this easier to understand, let’s take a look at what it might look like if you were paying back your student loans:
Let’s imagine you have a plan 1 student loan. Your income annually is £35,000 with a monthly payment of £2,916. That’s £1,082 over the threshold.
So,
£2,916 - £1,834
= £1,082
9% of £1,082
= £97,44 (your monthly repayment amount)
FAQ
Let’s take a look at some important questions people frequently ask when it comes to student loan plan types in the UK:
What If I Have Two Jobs?
If both jobs don’t add up to the required earning amount, then you won’t be required to pay your student loans back yet. If you have two jobs and one reaches the threshold and one doesn’t, you’ll use the one that does reach the threshold as your payment threshold, meaning the other doesn’t count towards your overall salary in the eyes of a student loan.
What If I’m Self-employed?
The HM Revenue and Customs (HMRC) will be able to determine how much you owe in terms of repayments for your student loans based on your tax returns. They will base it on your annual income for the year. In the event you’ve been making payments, they will note that and deduct it from the final amount that they’ve determined you owe.
How Do I Pay?
Self-employed individuals will be told by the HMRC they will then make payments with their tax payments. If you’re employed and are earning over the threshold, then it will automatically be deducted from your earnings by your employer.
You can make additional payments online by setting up an account. If you move overseas, you need to inform the Student Loan Company (SLC), which will tell you if you still need to make consistent repayments for your student loan while you’re not in the country as well as how much you’ll need to repay. Depending on where you’re going, the repayment thresholds can be different. Because overseas employers won’t be responsible for deducting and making repayments on UK student loans, you must pay via International Bank Transfer (IBAN) or your online account.
Conclusion
Navigating student loan plan types in the UK can be confusing, but once you know, you know. It’s important to understand this as it means having a better understanding of what your monthly repayments are and when those are expected from you.
