The amount an employee repays depends on which student loan plan they are on.
Each plan has an annual or monthly threshold. Any earnings over the relevant threshold are deducted at the following rate:
9% of earnings over the threshold for Plan 1, 2 and 4
6% of earnings over the threshold for the Postgraduate Loan
An employee may have plans 1, 2, or 4 and a Postgraduate repayment plan.
The employee doesn't repay anything if their income is under the threshold.
Interest is accrued from the date the student receives their first loan payment.
Note: This article refers to the thresholds and rates for the 2024–2025 tax year.
Plan 1
The threshold is £24,990.00 per year, or £2082.50 a month. The employee is usually on a Plan 1 repayment plan if they are:
an English or Welsh student who started your undergraduate course before 1 September 2012
a Scottish or Northern Irish student
Plan 1 Example
The employee is paid £2,500.00 per month.
£2,500 minus the plan 1 threshold of £2082.50 leaves £417.50 subject to student loan.
The plan 1 rate is 9% therefore, £37 is due (rounded down to the nearest £).
Plan 2
The threshold is £27,295.00 per year, or £2,274.58 a month. The employee is usually on a Plan 2 repayment plan if they are:
an English student who started your undergraduate course on or after 1 September 2012.
a Welsh student who started your undergraduate course on or after 1 September 2012.
Plan 2 example
The employee is paid £2,500.00 per month.
£2,500.00 minus the plan 2 threshold of £2274.58 leaves £225.42 subject to student loan.
The plan 2 rate is 9% therefore, £20 is due (rounded down to the nearest £).
Plan 4
The threshold is £31395.00 per year, or £2,616.25 a month. The employee is usually on a Plan 4 repayment plan if they are:
a Scottish student who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998
an EU student who started an undergraduate or postgraduate course in Scotland on or after 1 September 1998
Plan 4 example
The employee is paid £2,500.00 per month.
This is below the plan 4 threshold of £2,616.25, therefore no student loan repayment is due.
Postgraduate Loan
The threshold is £21000 per year, or £1,750 a month. The employee is usually on a Postgraduate repayment plan if they are:
an English or Welsh student who took out a Postgraduate Master’s Loan or Postgraduate Doctoral Loan.
If they're a Scottish or Northern Irish student who took out a Postgraduate Tuition Fee Loan or Postgraduate Living Cost Loan (Scotland only), this is covered under Plan 1.
Postgraduate loan example
The employee is paid £2,500.00 per month.
£2,500.00 minus the postgraduate loan threshold of £1,750 leaves £750 subject to student loan.
The postgraduate loan rate is 6% therefore, £45 is due (rounded down to the nearest £).
Combining plans
If an employee has both Plan 1, 2 & 4 loans
When the employee is on more than one plan (1, 2, or 4), HMRC guidance is to start deductions for the plan with the lowest recovery threshold, currently Plan 1, until you receive an SL1 notice to change the plan type.
If an employee has a Postgraduate Loan and a Plan 1, 2 or 4 loan
In this case, the repayments are calculated separately. The student loan repayment deduction for either of the repayment plans does not impact the other calculation.
Example Plan 1 and Postgraduate loan
The employee's receives a monthly salary of £2,500.00
Plan 1
£2,500 minus the plan 1 threshold of £2082.50 leaves £417.50 subject to student loan.
The plan 1 rate is 9% therefore £37 is due (rounded down to the nearest £).
Postgraduate loan
£2,500 minus the postgraduate loan threshold of £1,750.00 leaves £750 subject to student loan.
The postgraduate loan rate is 6% therefore, £45 is due (rounded down to the nearest £).
The employee has a student loan deduction of £37 and a postgraduate loan deduction of £45.
The Student Loans Company has more information on how they allocate repayments if you have a Plan 1, 2, 4 and Postgraduate Loan.