⚠️ We are currently updating our 2020/21 tax guidance across the website

Student loans

Updated on 9 June 2020

Students

What has tax got to do with it?

Yes, this is a 'tax guide' for students. But we need to talk about student loans as well. Why? Because the main way of repaying loans taken out since 1998 is via the tax system, so 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 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.

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 are moving online from April 2020 but you can request a paper version if you prefer. There are also plans to improve the student loans online repayment service to show up-to-date information on repayments and loan balances, this is expected to be available later in 2020.

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 a Plan 1, a Plan 2 or a 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.

Our page on ‘Where can I find out more about student loan repayments?’ provides links to further information, what to do about a student loan when a borrower dies and when are student loans written off.

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.

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