Student loans

Updated on 20 October 2020

Students

This section looks at the repayment of student loans through the tax system whether you are employed or pay tax through Self Assessment. It also covers what to do if you have a student loan and go abroad for more than three months.

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What has tax got to do with student loans?

What has tax got to do with student loans, well it is because the main way of repaying loans taken out since 1998 is via the tax system. You will deal with both the Student Loans Company (SLC) and HM Revenue & Customs (HMRC) when you leave or finish your studies and start paying back what you owe.

Student loans are borrowings from the UK government to help you live and pay your course fees. You usually pay them back when you leave or finish your studies. How much you can borrow depends on your personal circumstances, but we do not cover that aspect of student loans. If you are wondering how much you can get, we suggest you look at the student finance section on GOV.UK.

Which student loans are repaid through the tax system?

Our guidance is about income-based or income-contingent loans, which were first introduced in the autumn of 1998 and are repaid via the tax system.

We do not look at the ‘mortgage-style loans’ in place up to autumn 1998, because the repayments for those work differently. If you think yours is a mortgage-style loan, take a look at the Student Loans Company's repayment website.

There are two main types of income-contingent loans, which are referred to as ‘Plan 1’ and ‘Plan 2’ loans. Which one you have depends on what type of course you are on, when you took out the loan and which part of the UK you studied in – England, Northern Ireland, Scotland or Wales. It is possible to have more than one type of loan if you have been on more than one course and one started before 1 September 2012 and one afterwards. You should contact the Student Loans Company (SLC) if you are unsure which type of loan you have.

Plan 1 loans generally include:

  • loans for Scottish (up to April 2021) and Northern Irish undergraduates and postgraduates
  • loans for English and Welsh undergraduates if you started your course before 1 September 2012

Plan 2 loans generally include:

  • loans for English and Welsh undergraduates if you started your course on or after 1 September 2012
  • Advanced Learner Loans from 1 August 2013

Since April 2019 repayments started for postgraduate loans for English and Welsh students. The way repayments are calculated for these postgraduate loans is different to repayments for Plan 1 and Plan 2 loans and we explain more about this further in this section.

Plan 4 loans are new from April 2021 and will replace Plan 1 loans for Scottish undergraduates. We will update this section with information on Plan 4 loans in due course.

Both Plan 1 and Plan 2 loans are repaid via the tax system, and repayments on Plan 2 loans started to be collected from April 2016. Repayments of student loans are not deductible expenses for tax purposes.You should receive an annual statement each April detailing your loan balance, interest charged and any repayments made. These statements have moved online from April 2020 but you can request a paper version if you prefer. There are also plans to continue to improve the student loans online repayment service to show up-to-date information on repayments and loan balances, you can access your online student loan repayment account through GOV.UK.

It is very important that the SLC have up-to-date contact details for you especially if you move abroad or are close to finishing repaying your loan.

In the subsequent pages, we cover how and when you pay back your student loans, whether you are an employee or complete a Self Assessment tax return. To use this guidance you need to select whether you are repaying Plan 1, Plan 2 or postgraduate loan or a combination of these loans:

We also cover what to do about repaying your student loan if you go abroad for more than three months.

You should be aware that students are often targeted by fraudsters pretending to be either the SLC or HMRC. There is information on GOV.UK about these types of phishing emails or phone calls.

When are student loans written off?

This depends on the loan type, where the borrower lived when they took out the loan and when the course started. Loans are written off on death and there is discretion to write off loans earlier if the borrower receives a disability-related benefit and is permanently unable to work (there is more information about this on GOV.UK).

Type of loan

When is loan written off?

Plan 1

The conditions are complex and you should consult GOV.UK

Plan 2

30 years after it becomes eligible to be repaid

Postgraduate (England and Wales)

30 years after it becomes eligible to be repaid

What to do when the borrower dies?

Unfortunately, student loans are not covered by the government’s Tell Us Once scheme so you will need to inform the SLC of a borrower’s death to cancel their student loan. There is more information on this on GOV.UK and for general help on tax-related duties in the Bereavement and tax guide on our website.

Where can I find out more about student loan repayments?

Our factsheet summarises how you can repay your student loans if you are on a Plan 1 or Plan 2 loan.

There is information on GOV.UK about the repayment of different types of loans.

GOV.UK has a section on student finance explaining what loans you may be eligible to apply for.

Details of how to contact the Student Loans Company are on GOV.UK and HMRC have a guide on how to complete the student loan questions on a Self Assessment tax return.

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