Student Finance Centre

Repaying student loans

Please note that the information on this page is relevant to students from England or Wales who started their studies after 1 September 2012. If you started your course before this or you took your loan through Student Finance Northern Ireland or the Student Awards Agency for Scotland please visit the Student Loans Company website for information about the repayment arrangements that will apply to you.

  • How repayments are calculated

    Student Loans are income contingent, which means your monthly repayments are based on how much you earn, not how much you borrowed. You pay 9% of anything you earn over the threshold of £21,000 (gross) per year. This covers both your tuition fee and maintenance loans, you do not have to pay these back separately. The repayment threshold of £21,000 will increase each year from April 2017 to reflect the average national wage increase.

    How to work out your monthly repayment amount

    1. Take away £21,000 from your annual salary before tax
    2. Work out 9% of the remainder
    3. Divide that figure by 12
    4. Round down to the nearest pound

    E.g: Gross salary = £23,000

           Minus £21,000 threshold = £2,000

           9% of £2,000 = £180

           Divide by 12 months = £15 per month

    Example repayment amounts

    Annual income before taxGross monthly salaryMonthly repayment
    Up to £21,000 Up to £1,750 £0
    £22,000 £1,833 £7
    £25,000 £2,083 £30
    £30,000 £2,500 £67
    £35,000 £2,916 £105

  • How repayments are made

    You normally start to make repayments on your student loan from the April after you leave or finish your course, as long as you’re earning over £21,000 per year. However, for administrative reasons no one will start to make repayments under this system until April 2016, so if you leave your course before this date you will still not start to make any repayments until April 2016.

    If you are employed

    If you are employed your student loan repayments will be calculated automatically by your employer and taken directly from your salary. At the end of the tax year the repayments are sent to the Student Loans Company (SLC) via HM Revenue and Customs (HMRC). Your interest is then recalculated as though you had made the payments directly.

    Step 1 – repayments are taken from your salary

    Once you start to earn over £21,000 a year (£1,750 a month) your employer will begin taking student loan repayments from your salary. The amount taken will be shown on your pay slip. The repayments are taken after the deduction of Income Tax and National Insurance.

    Step 2 – your employer passes your repayments to HMRC

    At the end of each tax year your employer sends the money it has collected for your student loan to HMRC.

    Step 3 – HMRC tells the Student Loans Company (SLC) how much you have repaid

    HMRC then tells SLC the total amount of student loan repayments you have made in the tax year.

    Step 4 –SLC work out your new balance up to the end of tax year

    SLC divide the total amount you repaid in the year into 12 equal monthly repayments. These are then paid to your loan as 12 monthly instalments and the interest is calculated and added for each month.

    Step 5 – SLC send you a statement

    Once they have worked out your new balance SLC will send you a statement detailing how much you paid for the previous tax year, how much interest has been added and your total outstanding balance. The statement is usually sent each November, so it’s very important that you keep SLC informed of any changes of address.

    If you complete a self-assessment tax return

    If you are self-employed or have other taxable income HM Revenue & Customs (HMRC) will send you a self-assessment tax return after the end of the tax year. From the 2016 tax return onwards you will need to declare that you have a student loan to repay. HMRC will calculate how much you owe for the year and you will pay it as part of your annual tax bill.

    Step 1 – you indicate on your self-assessment tax return that you have a student loan

    When you indicate you have a student loan, HMRC knows to calculate how much you should repay based on your earnings for the tax year.

    Step 2 – you pay your tax bill to HMRC

    HMRC will advise you of your total tax liability for the year, which will include any student loan repayment you are due to make, and you pay them directly.

    Step 3 – HMRC tells the Student Loans Company (SLC) how much you have repaid

    HMRC then tells SLC the total amount of student loan repayments you have made in the tax year. The amount of student loan repayments you've made is included in your total tax liability for the year. HMRC only sends the student loan amount to SLC.

    Step 4 – SLC work out your new balance up to the end of tax year

    The total amount of student loan you've paid is applied to your account on the 31st January following the tax year to which the return applies. It is deducted from your loan balance as a single lump sum.

    Step 5 – SLC send you a statement

    Once they have worked out your new balance SLC will send you a statement detailing how much you paid for the previous tax year, how much interest has been added and your total outstanding balance. The statement is usually sent each November, so it’s very important that you keep SLC informed of any changes of address.

  • Repaying from overseas

    You have to let the Student Loans Company know if you move abroad once you have finished studying, as you are still obliged to make repayments if you earn over a certain amount. If you are working outside of the UK tax system your loan repayments cannot be deducted from your salary.

    If you will be overseas for more than 3 months, you will need to complete an Overseas Income Assessment Form to enable SLC to calculate how much you need to repay. The SLC will then send you a repayment schedule showing how much you need to pay each month. Your monthly payments will be based upon the earnings threshold for your destination country. Thresholds for different countries can be found on the Student Loans Company website.

    If you are paying back your loan from overseas you will need to do this by direct debit or another form of regular bank transfer, as the HMRC cannot collect repayments unless you are paying income tax in the UK.

  • How to find out your balance

    Calculating your current outstanding balance

    You can calculate your outstanding balance at any time by logging in to your account online at the Student Loans Company and using the Balance Calculator to work out how much you have left to pay. You will need to have details of all the deductions that have been taken from your pay or that you have paid to HM Revenue & Customs (HMRC) since the end of the last tax year. The Balance Calculator will show you what information you need to supply to get an accurate balance.

    Repayment deductions

    Repayment deductions from your salary will be shown on your pay slips or your P60. You should keep these documents as the Student Loans Company do not receive details of your repayments from HMRC until after the end of each tax year.

    It is important that you monitor your repayments and keep track of your balance so you know when you are due to finish repaying.

    Statements

    You will receive an annual statement of your student loan every year, usually in the autumn. If you are still studying the statement is for information only.

  • Interest Rates

    The interest rate that applies to your loan is based on the UK Retail Price Index (RPI), and it can vary depending on your circumstances. The interest rate is updated once a year in September, using the rate of RPI from March. To find out the current rate of RPI used to calculate the interest rate applied check with the Student Loans Company.

    Full-time courses

    If you studied a full-time course the following table shows how your interest rate is determined.
    Your circumstancesInterest rate
    While you are studying on your course RPI plus 3%
    From the April after you graduated or left your course (but before April 2016 if earlier) RPI
    After April 2016 if you are earning up to £21,000 per year RPI
    After April 2016 if you are earning over £21,000 RPI plus between 0 - 3% depending on your salary
    After April 2016 if you are earning over £41,000 RPI plus 3%

    The £21,000 threshold used to calculate whether you make repayments and what rate of interest is applied to your loan will start to increase each year from April 2017 to reflect the average national wage increase.

    Part-time courses

    If you studied a part-time course the following table shows how your interest rate is determined.
    Your circumstancesInterest rate
    While you are studying on your course until whichever comes first of
     - the April after graduating or leaving your course or;
     - the April after the fourth anniverary of the start of your course    		 RPI plus 3%
    From the April after you have graduated or left your course or after the fourth anniversary of the start of your course (but before April 2016 if earlier) RPI
    After April 2016 if you are earning up to £21,000 per year RPI
    After April 2016 if you are earning over £21,000 RPI plus between 0 - 3% depending on your salary
    After April 2016 if you are earning over £41,000 RPI plus 3%

    The £21,000 threshold used to calculate whether you make repayments and what rate of interest is applied to your loan will start to increase each year from April 2017 to reflect the average national wage increase.

  • Overpayments

    You are able to make overpayments to your student loan at any time by debit card on the Student Loans Company website. If you wish to make regular overpayments you can set up a direct debit or standing order to the Student Loans Company to do this. You will still have repayments deducted from your salary if you have any outstanding balance, even if you are also making overpayments. Make sure you keep a record of any voluntary repayments you make to ensure they are reflected on your annual statement.

    There are no penalties or charges for making overpayments or settling your balance. However, if you have other debts you may want to think about paying them off first. For more information about paying off student loans early have a look at this information from Money Saving Expert.

  • Frequently Asked Questions

    I earned less than £21,000 in the tax year but had student loan repayments taken, can I get a refund?

    You may have repayments taken in months where you earned more than usual, due to bonuses or overtime etc, but earn less than £21,000 over the whole year. If this happens you can apply to the Student Loans Company for a refund of any repayments you have made in a tax year where you have earned less than £21,000. However, SLC will not process refunds automatically, you must request a refund from them. You may decide you do not want a refund, in which case you will pay off your loan more quickly and pay less interest on the outstanding balance. SLC can only process a refund at the end of a tax year either once they’ve received confirmation of your PAYE income and student loan deductions from HM Revenue & Customs or where you supply them with a P60 showing this information.

    Can my student loan be written off?

    Normally any outstanding loan you have will be written off 30 years after it becomes eligible to be repaid.  Howvever if you receive a disability-related benefit and are permanently unfit for work, SLC can cancel the loan.

    Does my student loan show up on credit checks?

    No, student loans do not show on any credit checks that are carried out, so won’t count against you when you apply for other credit.

    Will having a loan stop me from getting other credit or a mortgage?

    Having a student loan is very unlikely to affect your ability to get a mortgage. Mortgage lenders usually take account of your monthly net income when deciding how much they will lend you, so they will want to know about the fact that student loan deductions are made from your salary. However the amount outstanding on your student loan will not be taken into account, because mortgage lenders are aware that you will only make payments according to your income.

  • Examples of University of Portsmouth graduate salaries

    These are examples of average salaries of our graduates six months after leaving the university. Please note these figures are taken from Unistats and relate to the 2009/10 academic year, and as they are taken 6 months after graduation they are only a snapshot of potential earnings at an early point in graduate's careers. For details of average graduate salaries in other subject areas visit UniStats.

    Subject areaAverage salary after graduationMonthly student loan repayment
    Law £17,000 £0
    Accounting £18,000 £0
    Pharmacy £19,000 £0
    Civil Engineering £23,000 £15
    Electronic and Electrical Engineering £24,000 £22.50
    Social Work £25,000 £30

Document downloads:

Relevant links: