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Postgraduate loans

Updated on 21 January 2021


This page looks at the repayment of postgraduate loans (both Master’s and Doctoral loans) in England and Wales, the first repayments for these loans started to be collected from April 2019. Scotland and Northern Ireland collect postgraduate loans as Plan 1 loans.  

Illustration of a postgraduate and money symbols
(c) Shutterstock / SurfsUp

How much are postgraduate loan repayments?

Postgraduate loan repayments started from April 2019, and in very basic terms, student loan repayments of this type of loan are due at a rate of 6% for both the 2019/20 and 2020/21 tax years: 

  • on your earnings over £21,000 a 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. 

However, the calculations of the repayments are more complicated if you are still repaying a Plan 1 or Plan 2 student loan.

When do I start paying back my postgraduate loan?

When you start paying back your loan will depend upon whether you have a Master’s loan or a Doctoral loan and if you are studying part-time or full-time. If you leave your course early, then you should contact Student Finance England about repaying your loan.

Postgraduate Master’s loans

As in the case of Plan 1 and Plan 2 loans you will usually start repaying your postgraduate Master’s loan from the April after you have finished your postgraduate course if you are earning above the repayment threshold. The exception to this is if you are on a part-time postgraduate Master’s course which lasts 3-4 years and started in the 2016/17 academic year (for example: started in October 2016) in which case repayments started from April 2019, provided you earn above the repayment threshold.

Example: Dorian

Dorian finished his postgraduate Master’s course in the summer of 2019 and starts a new job earning £25,000 annually. Even though Dorian is earning above the repayment threshold for his postgraduate loan he will not start his repaying his postgraduate loan until April 2020.

If Dorian also had a Plan 1 loan, then he would start repayments on the Plan 1 loan only when he starts his new job in 2019 because the start date for that job is after the 5 April following the completion of his undergraduate course: it is only his postgraduate loan repayments which do not start until April 2020.

Postgraduate Doctoral loans

If you have a postgraduate Doctoral loan and are earning above the repayment threshold, then repayments start from the earliest of:

  • the April following the end of your course (as in the case of Plan 1, Plan 2 or postgraduate Master’s loans); or
  • the April four years after the start of your course (so if you started your postgraduate Doctoral loan in October 2016 this would be April 2021).

How are postgraduate 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 postgraduate 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 a Plan 1 or Plan 2 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 correctly about what loans you have so that repayments are calculated correctly.  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. 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 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 when you have either a Plan 1 or Plan 2 loan.

Your earnings for postgraduate loans are calculated in the same way as they are for NIC. Our pages on Plan 1 and Plan 2 loans explain 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 postgraduate loan repayments are calculated through PAYE is best illustrated through an example.

Example: Sophie

Sophie has recently completed her postgraduate course and started work in September 2019 earning £27,500 annually. She does not have any outstanding Plan 1 or Plan 2 loans to repay and she is paid monthly.

Sophie completes her starter checklist and informs her new employer that she only has a postgraduate loan, her employer receives the HMRC ‘start notice’ to begin deducting postgraduate student loan repayments from 6 April 2020 if Sophie’s income goes over the repayment threshold: £21,000 a year, which is £1,750 a month.

At the end of April, Sophie checks her payslip and sees that there is a ‘student loan’ deduction of £32.50; this is calculated as Sophie’s gross pay (before deductions for tax and NIC) of £2,291.66 less the monthly repayment threshold of £1,750 x the repayment rate (6%):

  • £2,291.66 – £1,750 = £541.66
  • £541.66 x by 6% = £32.50

Later, when Sophie checks her borrower balance with the SLC she can see that this deduction has been taken off her 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 (£21,000 in both 2020/21 and 2019/20) but have had postgraduate 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 pages on Plan 1 and Plan 2 loans for more information).

Employed in more than one job

If you have more than one employment and work for different, unconnected employers, your postgraduate 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 pages on Plan 1 and Plan 2 loans for examples).

How are postgraduate 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 postgraduate loan repayments are calculated.

Example: Tomas

Tomas, who has recently completed his postgraduate course and started his own business as a self-employed consultant in May 2020, needs to complete a Self Assessment tax return for the 2020/21 tax year. Tomas has no other taxable income or student loans apart from his postgraduate loan.

If Tomas’s self-employment profits were £26,000 then he would need to pay student loan repayments of £300 for the 2020/21 tax year through the Self Assessment process (calculated as £26,000 – £21,000 x 6%, so £5,000 x 6%).

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. 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 2021, your payment will be due on 31 January 2022.

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 for making student loan repayments through Self Assessment, although the examples focus on Plan 1 and Plan 2 loans, the principles are the same for postgraduate loan repayments.

Our pages on Plan 1 and Plan 2 loans explain 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 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.

I have a graduate loan and a postgraduate loan: how will my repayments be calculated?

Many postgraduates will also be repaying student loans for their undergraduate studies. Repayments of Plan 1 and Plan 2 loans are also made through the tax system.

Postgraduate loans repayments are calculated and, if applicable, repaid concurrently with Plan 1 and/or Plan 2 loan repayments. How these repayments are calculated are best shown through examples:

Euan: example of an employee with a Plan 1 and a postgraduate loan

Euan finished his postgraduate course in the summer of 2019 and started work a few months later. He has a Plan 1 loan, which he has been repaying both before he started his postgraduate Master’s course and since he started work in September 2019. Euan earns £24,000 and is paid monthly so his monthly salary is £2,000.

The repayment threshold for a Plan 1 loan is £19,390 per year (£1,615.83 per month) and for a postgraduate loan, it is £21,000 per year (£1,750 per month).

In April 2020 Euan receives his payslip and his total deduction for student loan repayments is £49.58.

This is calculated as follows:

  • Plan 1 loan: £2,000 less £1,615.83 = £384.17
    Repayment rate is 9% so the Plan 1 repayment is £384.17 x 9% = £34.58.
  • Postgraduate loan: £2,000 less £1,750 = £250
    Repayment rate is 6% so the postgraduate loan repayment is £15.

The total monthly repayment Euan makes in April 2020 is £34.58 + £15, which is £49.58.

Ava: example of repayments under Self Assessment with a Plan 2 and a postgraduate loan

Ava is self-employed and has calculated profits of £35,000, she also has rental profits of £3,000 after using available tax reliefs. She has a Plan 2 loan and a postgraduate loan which is due to be repaid from April 2020.

The repayment threshold for a Plan 2 loan is £26,575 per year and for a postgraduate loan it is £21,000 per year.

Ava fills in her 2020/21 Self Assessment tax return, she has total taxable income of £38,000 (please note that all of Ava’s unearned income is included as it is above the £2,000 unearned income threshold). Ava’s total student loan repayments for 2020/21 are calculated to be £2,048.25, this will be due by 31 January 2022.

The loan repayments are calculated as follows:

  • Plan 2 loan: £38,000 less £26,575 = £11,425
    Repayment rate is 9% so the Plan 2 repayment is £1,028.25.
  • Postgraduate loan: £38,000 less £21,000 = £17,000
    Repayment rate is 6% so the postgraduate loan is £1,020.

Where can I get more information?

GOV.UK has information on postgraduate Doctoral loans and Master’s loans.

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

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