How much you repay depends on your income - the amount you earn (including things like bonuses and overtime) before tax and other deductions.
You’ll repay a percentage of your income over the ‘threshold’ for your type of loan, depending on how often you get paid.
The thresholds are different for each plan type.
| Plan type | Yearly threshold | Monthly threshold | Weekly threshold |
| Plan 1 | £22,015 | £1,834 | £423 |
| Plan 2 | £27,295 | £2,274 | £524 |
| Plan 4 | £27,660 | £2,305 | £532 |
| Plan 5 | £25,000 | £2,083 | £480 |
| Postgraduate Loan | £21,000 | £1,750 | £403 |
You’ll repay either:
- 9% of your income over the threshold if you’re on Plan 1, 2, 4 or 5
- 6% of your income over the threshold if you’re on a Postgraduate Loan plan
The examples show how much you’d repay depending on your income and plan type:
Example
You’re on Plan 1 and have an income of £33,000 a year, meaning you get paid £2,750 each month.
Calculation:
£2,750 – £1,834 (your income minus the Plan 1 threshold) = £916
9% of £916 = £82
This means the amount you’d repay each month would be £82.
Example
You’re on Plan 4 and have an income of £30,000 a year, meaning you get paid £2,500 each month.
Calculation:
£2,500 – £2,305 (your income minus the Plan 4 threshold) = £195
9% of £195 = £18
This means the amount you’d repay each month would be £18.
If your income changes during the year
You’ll make a repayment if your income goes over the weekly or monthly threshold for your plan (for example, if you’re paid a bonus or overtime). You can ask for a refund at the end of the tax year if your annual income is less than the yearly threshold for your plan.
Interest
How much interest you’re charged depends on which plan you’re on. You’re currently charged:
- 6.25% if you’re on Plan 1
- 7.7% if you’re on Plan 2
- 6.25% if you’re on Plan 4
- 7.7% if you’re on Plan 5
- 7.7% if you’re on a Postgraduate Loan plan
You can find out more about:
- how Plan 1 interest is calculated and interest rates for previous years
- how Plan 2 interest is calculated and interest rates for previous years
- how Plan 4 interest is calculated and interest rates for previous years
- how Plan 5 interest is calculated and interest rates for previous years
- how Postgraduate Loan interest is calculated and interest rates for previous years
If you’re on more than one plan type
How much you repay depends on which of your plan types has the lowest repayment threshold and whether or not you have a Postgraduate Loan.
If you do not have a Postgraduate Loan
You’ll repay 9% of your income over the lowest threshold out of the plan types you have. You’ll only have a single repayment taken each time you get paid, even if you’re on more than one plan type.
Example
You’re on Plan 1 and Plan 2 and have an income of £25,200 a year, meaning you get paid £2,100 each month. This is over the Plan 1 threshold of £1,834 but under the Plan 2 threshold of £2,274.
You’ll repay 9% of your income over £1,834 a month because that is the lowest threshold out of the plan types you have.
Calculation:
£2,100 – £1,834 (your income minus the lowest threshold) = £266
9% of £266 = £24
This means the amount you’d repay each month would be £24.
If your income went over the Plan 2 threshold, you’d still only repay 9% of your income over the Plan 1 threshold. You would not have to make a separate repayment towards your Plan 2 loan.
If you have a Postgraduate Loan
You’ll repay 6% of your income over the Postgraduate Loan threshold (£21,000 a year) and 9% of your income over the lowest threshold for any other plan types you have.
Example
You have a Postgraduate Loan and a Plan 2 loan and have an income of £28,800 a year, meaning you get paid £2,400 each month. This is over the Postgraduate Loan threshold of £1,750 and the Plan 2 threshold of £2,274.
Calculation:
£2,400 – £1,750 (your income minus the Postgraduate Loan threshold) = £650
6% of £650 = £39
£2,400 – £2,274 (your income minus the Plan 2 threshold) = £126
9% of £126 = £11
This means the amount you’d repay each month would be £50.
If you have more than one job
You’ll only make repayments from jobs where you’re paid over the threshold for your plan type, not your combined income.
Example
You have a Plan 1 loan and you have 2 jobs. Before tax and other deductions, you’re paid £1,000 a month from one job and £800 a month for the other.
You will not have to make repayments because neither salary is above the £1,834 a month threshold.
Example
You have a Plan 2 loan and you have 2 jobs. Before tax and other deductions, you’re paid £2,300 a month from one job and £500 a month for the other.
You will only make repayments on the income from the job that pays you £2,300 a month because it’s above the £2,274 threshold.
If you’re self-employed
HM Revenue and Customs (HMRC) will work out how much you repay each year from your tax return. Your repayments will be based on your income for the whole year.
If you’ve already made repayments from a salary, HMRC will deduct them from the amount you have to repay.
FAQs
If you default on your student loan, that status will be reported to national credit reporting agencies. This reporting may damage your credit rating and future borrowing ability. Also, the government can collect on your loans by taking funds from your wages, tax refunds, and other government payments.
How many people actually pay back student loans? ›
The majority of private student debt is actively in repayment. In the third quarter of 2021, 74% of private loans were in repayment, 17.5% were deferred, 6% were in a grace period and 2.4% were in forbearance.
Why is it so hard to pay back student loans? ›
Key Points. Interest can make student loans more expensive, while inflation can make that debt harder to manage alongside other bills. Paying off some of your debt during your studies could ease the burden later on and save you money on interest.
Who qualifies for student loan forgiveness? ›
You may be eligible for income-driven repayment (IDR) loan forgiveness if you've have been in repayment for 20 or 25 years. An IDR plan bases your monthly payment on your income and family size.
Do student loans go away after 20 years? ›
All borrowers on SAVE receive forgiveness after 20 or 25 years, depending on whether they have loans for graduate school. The benefit is based upon the original principal balance of all Federal loans borrowed to attend school, not what a borrower currently owes or the amount of an individual loan.
What are 3 effects of not paying back student loans? ›
You lose eligibility for additional federal student aid. The default is reported to credit bureaus, damaging your credit rating and affecting your ability to buy a car or house or to get a credit card. It may take years to reestablish a good credit record.
How long does it take the average person to pay off student loans? ›
On average, people with student loans have spent just over 21 years paying back their loans. Federal student loans offer repayment plans that last from 10 to 30 years. Private student loan repayment terms vary.
What is the average student debt after 4 years? ›
Among those who do borrow, the average debt at graduation is $27,400 — or $6,850 for each year of a four-year degree at a public university. Recent college graduates earn $24,000 more annually than peers of the same age whose highest degree is a high school diploma.
What age do people pay off student loans? ›
The average student borrower takes 20 years to pay off their student loan debt. 43% of borrowers are on the standard 10 years or less plan with fixed payments. Some professional graduates take over 45 years to repay student loans.
How much is the monthly payment on a $70,000 student loan? ›
The monthly payment on a $70,000 student loan ranges from $742 to $6,285, depending on the APR and how long the loan lasts. For example, if you take out a $70,000 student loan and pay it back in 10 years at an APR of 5%, your monthly payment will be $742.
One in 2 grads with loans have regrets.
Why you shouldn t worry about repaying your student loan? ›
If you don't earn enough, you don't have to repay. Unlike normal borrowing, which requires payment regardless of your situation, with student loans you don't need to repay them unless you're earning over a set amount. This applies even if you have started paying and then your income drops.
Did Biden cancel student loan debt? ›
FACT SHEET: President Biden Cancels Student Debt for more than 150,000 Student Loan Borrowers Ahead of Schedule. Today, President Biden announced the approval of $1.2 billion in student debt cancellation for almost 153,000 borrowers currently enrolled in the Saving on a Valuable Education (SAVE) repayment plan.
Should I wait to pay off my student loans? ›
Key takeaways. Paying off student loans early can benefit you financially, but it should typically come second to building your emergency fund and retirement savings. People with private student loans or without other debt tend to benefit more from paying off student loans early.
How do I know if my student loans will be forgiven? ›
If you have loans that have been in repayment for more than 20 or 25 years, those loans may immediately qualify for forgiveness. Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones.
What would happen if I just didn't pay my student loans? ›
Missing payments can rack up penalties and fees, which can make your debt more expensive. Your credit score will take a hit. If you default on federal student loans, the government could garnish your wages, tax refund and even Social Security benefits.
What if you don't pay your private student loans? ›
If you're unable to make your private student loan payments, the lender can report your default to consumer reporting agencies, which could harm your credit. They may take different actions to collect the debt.
What happens if you don't spend all of your student loans? ›
You could keep the leftover student loan money for the next academic term or school year instead of sending the money back. But, it is better to return the money if it is an unsubsidized federal loan or a private student loan. Returning the money will reduce the amount of interest you will be charged on the debt.
What happens if you never earn enough to repay student loans? ›
If you stop working, or start to earn below the repayment threshold, your repayments will stop until you earn over the threshold. You'll make a repayment if you go over the weekly or monthly threshold at any point during the year, for example, if you get a bonus or work overtime.
