Student Loan Repayments – Post 1998

Who provides Student Loans in the UK?

If you have taken out a student loan for a University course it will have been provided by the Student Loans Company. The Student Loans Company is a UK public sector organization and is established to provide financial services in the form of both loans and grants to UK students. They are also responsible for the administration and repayment of the loans.

Courses commenced after 1998

For students who have taken out a student loan for a course which started in or after 1998 then the repayment of the loan is centred on your income following the completion of the course.

Repayments based on income

Following the completion of your course if you start earning over a certain amount then you will have to start paying back your loan. This amount is termed the repayment threshold. If you are earning but it is less than the specified repayment threshold then you will not be required to start paying back your loan.

If you are above the threshold the amount of the payments will be calculated as a percentage of the income which you are earning.

Repayment Threshold

The current repayment threshold is set at an annual salary of £15,000 before deductions. This means that the deduction of income tax, national insurance etc is not included when setting the repayment threshold.

If you do not earn an annual salary but are paid on either a weekly or monthly basis then the equivalent repayment thresholds are the following:

  • £1,250 a month
  • £288 per week

How will my student loan repayments be made?

The most common way in which your student loan repayments will be made automatically though the UK tax system. The following options for paying back student loans are available and they depend upon what kind of employment situation you find yourself in.

  • PAYE – Pay As You Earn. This is for people who are employed by an individual or company which pays that person a salary. Deductions will be made automatically from your salary and will appear on your pay slip.
  • Self Assessment. If you are self employed through running your own business as an example or if you are both self employed and employed by another individual or company then it is up to you to calculate your own repayments and to make these repayments.
  • Overseas. If you are currently working overseas or plan to work overseas then you will be required to make a specific arrangement with the Student Loans Company.

Payment Calculation

The repayments are worked out on a basis of paying 9% of what you earn over the repayment threshold. For example if you pay on a monthly basis through PAYE then you will be required to pay 9% of what you earn each month over the threshold of £1,250 a month. In most cases when you first start earning following University you will expect to pay around £22 each month in student loan repayments.

Always remember it is not 9% of your total earnings but only 9% of what you earn over the repayment threshold.

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For more information on:

  • When will the repayments begin?
  • Graduation
  • Examples
  • Do I have to stick to the repayments or can I pay more to pay the loan off quicker?
  • What else am I entitled to do?
  • I receive disability benefits, how am I affected?
  • I am employed but my income various from month to month. How is my loan calculated?
  • Student Loan Interest