How and when do I pay back my Plan 1 student loan?

Updated on 20 October 2020

Students

First, check this guidance is for you. Do you have a ‘Plan 1’ student loan?

⚠️ This page covers only Plan 1 income-contingent student loans. The first repayments on ‘Plan 2’ loans started to be collected via the tax system from April 2016 and repayments on postgraduate loans started from April 2019.

Illustration of a student in front of a graduation cap and a student loan document
(c) Shutterstock / Siberian Art

⚠️ You should contact the Student Loans Company (SLC) if you are unsure which type of loan you have.


How much are Plan 1 student loan repayments?

In very basic terms, student loan repayments are due at a rate of 9%:

  • on your earnings over £19,390 a year (from 6 April 2020 to 5 April 2021; for 2019/20 the threshold was £18,935), whether from employment or self-employment
  • on other income over £2,000 a year if you are required to fill in a tax return under Self Assessment.

How are Plan 1 student loans paid back?

There are basically three ways of repaying:

  • through your wages, under Pay As You Earn (PAYE)
  • through HM Revenue & Customs’ Self Assessment system
  • direct to the Student Loan Company (SLC).

How do you know which one (or more than one, in some cases) applies to you? Use the table below as a guide.

Would you answer ‘yes’ to the questions below?

 

Then your student loan will be repaid by:

Are you employed in the UK?

PAYE

Are you self-employed in the UK?

Self Assessment

Do you have other income (for example rents) and
HMRC ask you to fill in a tax return?

Self Assessment

Are you employed and self-employed?

PAYE and Self Assessment
(but you don't pay twice – sums taken under
PAYE come off your Self Assessment bill)

Are you going or have you gone abroad?

Direct payments to the SLC

Have you nearly repaid your loan in full?

Possible opt out of PAYE deductions and
switch to a direct debit to the SLC

Do you want to make extra payments direct to the SLC?

Direct payments to the SLC
⚠️ Caution: warning below


If you make voluntary or extra payments to the SLC, this does not reduce any amount that you might owe under PAYE or Self Assessment. Instead, you pay off your loan faster.

When do I start paying back my Plan 1 student loan?

You will usually start repaying your loan at the start of the tax year after you finish or leave your course. For example, if you completed your course in June 2015 then the first student loan repayment would start to be deducted in the following tax year, 2016/17, so from April 2016.

But payments only start if you earn over the ‘repayment threshold’. Your earnings are calculated before taking off tax or National Insurance contributions (NIC).

The repayment threshold changes each year:

  • 2018/19 (the tax year to 5 April 2019): £18,330
  • 2019/20 (the tax year to 5 April 2020): £18,935
  • 2020/21 (the tax year to 5 April 2021): £19,390

The subsequent pages explain the various ways of collecting repayments and how they are calculated for:

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