The information in this article is relevant to students from England or Wales who started their studies after 1 September 2012. If you started your course before this, or you took your loan through Student Finance Wales, Student Finance Northern Ireland or the Student Awards Agency for Scotland, please visit the Government website for information about the repayment arrangements that will apply to you.
Student loan repayments are based on how much you earn, not how much you borrowed. Undergraduate students will repay 9% of any income over £27,295 (gross) per year. This covers both Tuition Fee and Maintenance Loans so you only make one monthly repayment. Any outstanding loans that have not been repaid after thirty years from the April after you graduate are written off regardless of how much you have repaid. If your income drops below the threshold (£27,295) at any point during the thirty year repayment period you will stop making repayments.
If you are paid through PAYE your repayments will be automatically deducted from your wages by your employer. If you are self-employed you can make repayments directly to the Student Loans Company, these are calculated as part of your tax return.
How to work out your monthly repayment amount
- Take your annual taxable income (before tax) and deduct £27,295
- Work out 9% of the remainder
- Divide that figure by 12
- Round to the nearest pound
- Gross salary = £28,570
- Minus £27,295 threshold = £1,275
- 9% of £1,275 = £114.75
- Divide by 12 months = £10 per month
There are no penalties or charges for making overpayments or settling your balance at any time if you would like to. You are also able to make extra payments by debit card on the Student Loans Company website.
If you wish to make regular overpayments, you can set up a direct debit or standing order to the Student Loans Company to do this. You will still have repayments deducted from your salary if you have any outstanding balance, even if you are also making overpayments. Make sure you keep a record of any voluntary repayments you make to ensure they are reflected on your annual statement.