All students love their student loans until it’s time to pay it back. It can be difficult to know what repayments you’ll be making to student finance when the time comes. The difference between student loan repayment plans doesn’t have to be tricky to understand.
Without a student loan, many students wouldn’t be able to go to university. Though it’s common to blow through it fairly quickly, it’s a lifesaver for thousand. All students know that they have to pay back student finance at some point but might not know that there are different plans. It all depends on where you live and when you started your course.
The Difference Between Student Loan Repayment Plans
There are 4 different repayment plans: Plan 1, Plan 2, Plan 4 and the Postgraduate loan. You can’t decide what plan you’re on, but it does affect how much you will be repaying.
Student loan Plan 1 or 2?
The key difference between the first two plans is when you started your course. You will be on Plan 1 if you are an English or Welsh student who started your undergraduate course anywhere in the UK before 1 September 2012.
You will also be on Plan 1 if you are a Northern Irish student who started an undergraduate or postgraduate course on or after 1 September 1998.
If you are an EU student studying in England or Wales, then you will be on Plan 1 if you started your course on or after 1 September 1998, but before 1 September 2012. If you are studying in Northern Ireland, then it is just if you started on or after 1 September 1998.
Plan 2 applies to English, Welsh, and EU students studying outside of Scotland and Northern Ireland who started their course on or after 1 September 2012. It also applies if you took out an Advanced Learner Loan on or after 1 August 2013 and if you took out a Higher Education Short Course Loan on or after 1 September 2022.
Student Loan Plan 4
This plan only applies if you are a Scottish student or an EU student studying in Scotland. You’ll be on Plan 4 if you started an undergraduate or postgraduate course on or after 1 September 1998.
Postgraduate loan
This one is even simpler than the others. This will apply if you are an English or Welsh student who took out a Postgraduate Master’s loan on or after 1 August 2016. If you took out a Postgraduate Doctoral loan on or after 1 August 2018, this is your plan as well.
The Postgraduate Plan is also applicable to EU students who started a postgraduate course on or after 1 August 2016.
When Do You Start Paying Back Your Student Loan?
You will only start paying back when your income is over the threshold of your repayment plan. The threshold typically changes on 6 April every year.
The earliest you will stay paying back your student loan is the April after you have finished your course, or the April 4 years after the course started if your course is longer than 4 years (Part-time study/Postgraduate Doctoral).
- Plan 1: You will start repaying when your income is over £388 a week, £1682 a month or £20,195 a year.
- Plan 2: You will start repaying when your income is over £524 a week, £2274 a month or £27,295 a year.
- Plan 4: You will start repaying when your income is over £487 a week, £2114 a month, or £25,375 a year.
- Postgraduate loan: You will start repaying when your income is over £403 a week, £1750 a month, or £21,000 a year.
This is all before tax and other deductions apply to your income.
How Much Will You Repay?
This also depends on what repayment plan you’re on. For Plans 1, 2 and 4 you will repay 9% of your income over the threshold. This is 6% for those who took out a Postgraduate loan. It’s also worth noting that interest is added to your student loan from when you get your first payment.
For example, if you are on Plan 2 and your annual income was £28,800 then you receive £2400 per month. Your income is then £126 over the monthly threshold, meaning you will pay back 9% of £126 each month. This then equates to £11 a month.
If you want a more specific example, you can visit the Student Loan Repayment Calculator and enter your individual figures.
For more information, visit GOV.UK.
