Plan 4 Student loans

Updated on 18 April 2023

This section looks at Plan 4 Scottish student loans, the first repayments under Plan 4 loans started to be collected from April 2021. These loans are for Scottish borrowers only.

Illustration of students books and money

Who pays Plan 4 student loan repayments?

This is a loan repayment plan for Scottish student loan borrowers who have received loans from the Student Award Agency for Scotland (SAAS). The repayments started from April 2021 and include:

  • Borrowers who graduated in the 2020/21 tax year onwards (see When do I start repaying my Plan 4 loan section? below).
  • Scottish Plan 1 borrowers whose loans have been transferred from Plan 1 repayments to the new Plan 4 repayments.

Please note you do not have to be currently residing in Scotland to repay your loans under Plan 4, it is based on whether your student loan was issued by the SAAS. If you are unsure about what loan type you have then you should contact the Student Loans Company.

How much are Plan 4 student loan repayments?

Plan 4 loan repayments started from April 2021, and in very basic terms, student loan repayments of this type of loan are due at a rate of 9%:

  • on your earnings over £27,660 a year for the 2023/24 tax year (£25,375 for the 2022/23 tax year), whether from employment or self-employment (note that your earnings are calculated before taking off tax, National Insurance contributions (NIC) or pension contributions).
  • on other income over £2,000 a year if you are required to fill in a tax return under Self Assessment and have total income above the £27,660 repayment threshold in the 2023/24 tax year.

For example, Freya has a Plan 4 Scottish student loan and earns £28,000 per year. Her annual student loan repayment for 2023/24 is calculated as £30.60 (£28,000 - £27,660 = £340; £340 x 9% = £30.60).

When do I start repaying my Plan 4 student loan?

There are two scenarios when you may start making Plan 4 student loan repayments:

  1. Before April 2021, you were on a Plan 1 loan which was transferred to a Plan 4 loan in April 2021 and you are earning above the repayment threshold (see above). As the repayment threshold has increased significantly, for Plan 1 loans it was £19,390 in 2020/21 to £27,660 for Plan 4 loans in the 2023/24 tax year it is possible that you may no longer be required to make a Plan 4 student loan repayment even if your earnings have remained the same or increased.
  2. If you have recently graduated from university then 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 2022 then the first student loan repayment would start to be deducted in the tax year 2023/24 (if you are earning above the repayment threshold - see above).

How are Plan 4 student loans paid back?

There are basically three ways of repaying:

  • through your wages, under Pay As You Earn (PAYE)
  • through HM Revenue & Customs (HMRC) Self Assessment system
  • direct to the Student Loans 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?


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.

How are Plan 4 student loans paid back if I am an employee?

Employee student loan repayments come off your wages before you get them so check your payslips. Your payslips will usually have an entry described as ‘student loan’ but will not show how the repayment has been calculated. If you are also repaying another student loan in addition to your Plan 4 loan, then you may see two lines on your payslip for student loan repayments but not all payslips show this extra detail, so it is important that you understand how your loan repayments have been calculated.

Your employer is usually tasked with taking student loan repayments off your wages through the Pay As You Earn (PAYE) process.

When you start a new job, your employer will ask you to complete a starter checklist. It is important that you complete this form accurately about what loans you have so that repayments are calculated accurately. We provide an annotated example of a starter checklist to help explain how you should answer the questions so that the correct loan repayments are made.

The Student Loans Company (SLC) will notify HM Revenue & Customs (HMRC) at the start of the tax year (6 April) if you are due to start repayments and HMRC in turn issue a ‘start notice’ to your employer who will then calculate student loan deductions along with your tax and National Insurance Contributions (NIC) and pay them to HMRC through the PAYE system. The SLC should also have informed HMRC if your loan repayment plan changed in April 2021 from a Plan 1 type to a Plan 4 type and HMRC should have then informed your employer of this change. HMRC then pay these deductions to the SLC. The SLC then show your new loan balance on your borrower account, however this can take some time to be updated to show an accurate position.

If you think you should be on a Plan 4 loan but are having loan repayments deducted under a different repayment plan, such as Plan 1, then you should firstly check with your employer to see what plan type they are using for your student loan deductions and if you think it is incorrect then confirm your plan type with the SLC. You should notify your employer with the correct student plan. HMRC also check that employers are making student loan repayments using the correct plan types and will prompt them to make changes if an incorrect plan type is being used.

If you are nearing the repayment of your loan in full, you can sometimes ‘opt out’ of PAYE and arrange a direct debit to the SLC instead. The process to opt out is similar to how it works for a Plan 1 student loan.

Your earnings for Plan 4 student loans are calculated in the same way as they are for NIC. Our page on Plan 1 student loans explains this in more detail. Each pay day is looked at separately. Your repayments may vary according to how much you are paid in any particular week or month. If your income falls below the repayment threshold for that week or month, your employer should not make a deduction. How your Plan 4 student loan repayments are calculated through PAYE is best illustrated through an example.

Example: Lakbir

Lakbir completed his undergraduate course in 2015 and was repaying his student loan through Plan 1 repayments. He currently earns £29,000 per year and was informed that his student loan repayments moved from Plan 1 to Plan 4 from April 2021.

Lakbir will have student loan repayments automatically deducted through his pay if he earns above the Plan 4 repayment threshold: £27,660 a year for the 2023/24 tax year, which is £2,305 a month.

At the end of April 2023, Lakbir checks his payslip and sees that there is a ‘student loan’ deduction of £10.05; this is calculated as Lakbir’s gross pay (before deductions for tax and NIC) of £2,416.66 less the monthly repayment threshold of £2,305 x the repayment rate (9%):

  • £2,416.66 – £2,305 = £111.66
  • £111.66 x by 9% = £10.05

Later, when Lakbir checks his borrower balance with the SLC, he can see that this deduction has been taken off his outstanding balance. There may be some delay in seeing this reduction in your balance with the SLC, but this should be starting to be updated in real time.

Overpayments via PAYE

If you have fluctuating income and your pay varies per pay-period this may result in some pay periods where you earn above the repayment threshold and so student loan repayments are deducted by your employer. Overall, if you earn less than the annual repayment threshold (£27,660 in 2023/24 and £25,375 in 2022/23) but have had Plan 4 student loan repayments deducted through the PAYE system then you can only get a refund based on your annual earnings if either you have to complete a Self Assessment tax return or you can apply to the SLC for a refund (see our page on Plan 1 loans for more information).

Employed in more than one job

If you have more than one employment and work for different, unconnected employers, your Plan 4 student loan deductions are calculated separately for each job. Again, this follows a similar principle to NIC which is usually calculated on a job-by-job basis (see our page on Plan 1 loans for an example).

How are Plan 4 student loans paid back if I fill in a Self Assessment tax return?

Having a student loan is not in itself a reason for needing to complete a Self Assessment tax return. You usually only have to complete one if it is needed for your taxes and HM Revenue & Customs (HMRC) ask you to do so (or you notify them that you have a tax reason for needing one).

If you are required to complete a tax return, the form and the calculation also take into account your student loan repayments. If you complete a Self Assessment tax return then the same rules apply to how your Plan 4 student loan repayments are calculated.

Example: Poppy

Poppy, who completed her undergraduate course in June 2022 and started her own business as a self-employed website designer in May 2023, needs to complete a Self Assessment tax return for the 2023/24 tax year. Poppy has no other taxable income or student loans apart from her Plan 4 student loan.

If Poppy’s self-employment profits are £30,000 then she would need to pay student loan repayments of £210.60 for the 2023/24 tax year through the Self Assessment process (calculated as £30,000 – £27,660 x 9%, so £2,340 x 9%).

Unearned income

If you have to file a tax return and you get more than £2,000 a year in unearned income, this affects how much you have to repay, if your total income is above the £27,660 repayment threshold for the 2023/24 tax year (£25,375 for 2022/23). Unearned income includes, for example, interest from savings or profits from letting out a property (after taking account of the property allowance).

Importantly, the £2,000 is ‘all or nothing’. This means that if you get any unearned income of up to £2,000 a year, it is not taken into account at all; but as soon as you go over £2,000, the whole amount is taken into account.

Payment due date

Under Self Assessment, your student loan repayments are due on 31 January following the tax year end. So, for the tax year ended 5 April 2024, your payment will be due on 31 January 2025.

Student loan repayments are not part of any payments on account you are due to make under Self Assessment, nor do you need to take them into account if you are working out whether you can claim to reduce your payments on account.

Student loan repayments under Self Assessment are included with your overall tax and National Insurance Contributions (NIC) bill. So if you are late paying, for example, you will face the same penalty for your student loan repayment as the rest of your bill. On our page What if I cannot pay my tax bill? we provide some guidance on what to do if you are having difficulty paying. There is also information explaining the Budget Payment Plan (also called ‘pay weekly or monthly’) for making student loan repayments through Self Assessment, although the example focuses on Plan 1 loans, the principles are the same for Plan 4 student loan repayments.

Our page on Plan 1 student loans explains what information on your student loans you may need when completing your Self Assessment tax return.

Voluntary repayments and overpayments

You can make voluntary repayments direct to the SLC at any time. But if you do so, these payments will not reduce the amount that you have to pay under Self Assessment and therefore should not be included on your tax return.

If you have made repayments direct to the SLC because you have been working abroad and then complete a Self Assessment tax return, HMRC will calculate your loan repayments without considering any direct repayments. We cover what you can do on our page: What happens to my student loan if I go abroad?.

If, however, you are employed and repayments have been deducted under Pay As You Earn (PAYE) by your employer, these do come off the amount due under Self Assessment.

If you are in the situation where you think the amount due under the Self Assessment calculation is too much – that is, you will then be owed money by the SLC – you can contact HMRC to apply for an informal ‘stand over’. This would allow you to pay a smaller amount in the meantime until the position is resolved.

If you do overpay your student loan through Self Assessment, then the overpayment will be allocated against any other outstanding amounts due such as income tax or National Insurance contributions. If there are no outstanding liabilities, then you can request the overpayment to be repaid. 

How are my repayments recalculated if I have more than one loan?

It is possible that you have more than one student loan to repay, for example:

  • You may have had a Plan 1 loan which is now being repaid under Plan 4 and then, having worked and lived in England for several years completed an advanced learner course in England or Wales so also have a Plan 2 loan (see example of Dan below).
  • You may have had a Plan 1 loan which is now being repaid as a Plan 4 loan and, having moved to Wales some time ago, also a postgraduate loan (see the example of Arjun on our Postgraduate loans page).

If you have more than one loan you still will only make one repayment, for example through your payroll or through Self Assessment if you complete a tax return. If you are an employee your form P45 (the form you are given by your old employer when you change jobs) will not show which type of loan(s) you have, so your employer should ask you what loan plans you have. If you do not confirm what loan plan(s) you have you will automatically be allocated a Plan 1 loan and this may result in incorrect repayments being deducted through the Pay As You Earn (PAYE) system.

Your student loan repayment will be allocated against the two types of loans depending on how much you earn and the repayment thresholds for the loans. So if you have Plan 4 and Plan 2 student loans the repayments would be allocated as follows:

For the 2023/24 tax year the repayment thresholds are:

  • Plan 4 loans: £27,660
  • Plan 2 loans: £27,295

If you earn below £27,295 you will make no loan repayments.

If you earn between £27,295 and £27,660 you will make Plan 2 loan repayments only.

If you earn over £27,660 you will make repayments which will be spread across both your Plan 4 and Plan 2 loans. This means that repayments calculated on income between £27,295 and £27,660 will be allocated against your Plan 2 loan and repayments calculated on your income above £27,660 will be allocated against your Plan 4 loan.

This allocation is best shown with an example.


Dan has completed two courses, one started in 2009 and one in September 2018. He has two student loans, one was a Plan 1 Scottish student loan which has changed to a Plan 4 loan from April 2021 and one is a Plan 2 loan. He finished his second course in July 2019 and started work soon after graduating from his second course. Dan earns £32,000 per year and for the 2023/24 tax year his repayments will look like this:

As Dan is earning above the Plan 4 and the Plan 2 repayment thresholds, he will be repaying both of his loans. Although Dan will only see one deduction on his payslip which totals £423.45 across the tax year or £35.29 per month, this will be split between his two student loans.

The annual repayments are calculated as (£32,000 - £27,295) x 9%, so £4,705 x 9% = £423.45.

This is then split as follows:

Plan 2 loan: £27,660- £27,295 (the Plan 2 repayment threshold) at 9%

= £365 x 9% = £32.85 per year or £2.74 per month

Plan 4 loan: £32,000 - £27,660 (the Plan 4 repayment threshold) at 9%

= £4,340 x 9% = £390.60 per year or £32.55 per month.

Towards the end of repaying your loans you can switch to monthly direct debits when you have fully repaid one loan and you expect to finish repaying your other loan over the next two years.

Remember if you have more than one student loan then you start to repay your loan if you are earning over the repayment threshold from the April after you graduate from each course separately. For example, if you have both a Plan 4 loan (previously a Plan 1 Scottish loan) and a Plan 2 loan and you graduated from your first course (Plan 4) in July 2012 and from your second course (Plan 2) in July 2022 and begin a new job in August 2022 earning £29,000 annually then you will immediately start repaying your Plan 4 loan as you graduated from the course in July 2012, but you will not start repaying your Plan 2 loans until the April after you graduated from that course, so Plan 2 repayments will start from April 2023.

Where can I get more information?

The Students Awards Agency Scotland website contains information about what types of funding you can apply for as a Scottish student.

The Student Loans Company (SLC) is responsible for all student loan repayments including Plan 4 loan repayments.

Also there is information on GOV.UK on how to complete the student loan questions on paper and online Self Assessment tax returns.

Tax guides

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