Last updated on:
March 17, 2024
Student loan deductions are an efficient mechanism where repayments are directly taken from your salary by your employer and forwarded to HMRC, which in turn pays off your student loan to the Student Loans Company. This seamless process is integrated into the PAYE (Pay As You Earn) system.
Determining Your Student Loan Repayment Plan
Your student loan repayment amount is dictated by your specific Student Loan Plan, which is influenced by your course start date and your current income level:
- Student Loan Plan 1 (SLP1): If your study commenced in Scotland or Northern Ireland, or before September 2012 in England or Wales, you're on this plan. You repay 9% of earnings exceeding the annual threshold of £20,195 for the 2023/24 tax year.
- Student Loan Plan 2 (SLP2): For those who began their courses in England or Wales post-September 2012, 6% of earnings above £27,295 (2023/24) is due.
- Postgraduate Loans (PGL): Here, 6% of earnings over £21,000 are payable.
- Mortgage Style Loans (MGL): An older loan type for courses started before September 1998, resembling traditional loan structures.
When Do Deductions Begin and End?
- You're obliged to start repaying your student loan from the 6th April following your graduation year, provided your income surpasses the aforementioned thresholds.
- Repayment cessation occurs either when the loan is fully repaid or, for most loan types except MGLs, 30 years post-repayment commencement.
For Non-PAYE Employees
- Self-Employed? Your student loan repayments will be processed through your Self Assessment tax return.
- Living Abroad? If you're overseas for three months or more, it's crucial to inform the Student Loans Company to make appropriate arrangements.
This framework ensures a straightforward repayment journey for student loans, directly aligning with your earning trajectory.
