Student loan and postgraduate loan repayments

Produced by Tolley

The following Personal Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Student loan and postgraduate loan repayments
  • Repayments
  • Plan 1 loans
  • Plan 2 loans
  • Plan 4 loans
  • Master’s loans
  • Doctoral loans
  • Amount of the repayment
  • Repayments where the individual has Plan 1 / Plan 4 and Plan 2 loans
  • Repayments where the individual has a student loan and a postgraduate loan
  • More...

Student loan and postgraduate loan repayments

For individuals who took out student loans in relation to University courses in England, Scotland, Wales and Northern Ireland starting on or after August 1998, the repayments of the loan are collected via the payroll or tax return based on a percentage of total income. The repayments collected by HMRC are then paid to the Student Loans Company. Note that although the original loan application may have been made through an agency in the relevant country (eg the Student Awards Agency for Scotland for student finance in relation to Scottish Universities), the loans are delivered through the Student Loans Company.

Those individuals who took out student loans for courses starting before August 1998 made fixed payments direct to the Student Loans Company with a repayment term of five years. These loans are not considered further as there is no interaction with the tax system.

For those who took out student loans to fund courses starting on or after August 1998, there are three different regimes for undergraduates:

  1. Plan 1 ― loans in respect of courses which started between August 1998 and 31 August 2012

  2. Plan 2 ― loans in respect of courses which started on or after 1 September 2012 (also known as post-2012 student loans)

  3. Plan 4 ― this is a redesignation of Plan 1 loans taken out by students who studied in Scotland and applied for the loans through the Student Awards Agency for Scotland. The redesignation applies from 6 April 2021 in order to allow for the increase to the repayment threshold introduced by the Scottish Government (see below)

For details of the interest charged on the balance owed under each Plan, see the GOV.UK website. Note that whilst the interest charged under Plan 2 loans is fixed at the retail price index (RPI) plus 3% whilst the individual is studying, after leaving the course, the interest rate varies depending on the level of the individual’s income on a

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