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Repaying student loans

Most UK students who have taken out the full loan entitlement will be borrowing over £14,500 a year. So it is worth being realistic about the repayment arrangements.

If your loan was from England or Wales, you pay back the amount you have borrowed, adjusted for inflation; but this is increased (by up to a maximum of 3% pa) while you are studying and after you are earning £21k. So the amount you pay is related both to the amount you borrowed and the amount you earn.

You start paying back your student loans through the tax system, after you have finished your studies and are earning over £21k pa − you pay 9% of those earnings over the £21k threshold. So –

Here are some examples.

  • If you are earning £20,999 pa, you pay nothing.
  • If you earn £25,000 a year, you will pay 9% of £4000 (ie the difference between £21k and £25k). This means you will pay £360 pa (£30 a month).
  • If you earn £50,000 a year, you will pay 9% of £29,000 (ie the difference between £21k and £50k). This means you will pay £2610 pa (£217.50 a month).
  • If your earnings never reach £21k, you never repay your loan or any part of it.
  • The outstanding balance of your loan is cancelled after 30 years, if you die, or if you become permanently unable to work through illness or disability.
  • You do not need to repay any money paid in grants, bursaries or scholarships

If your loan was from Scotland or Northern Ireland, you pay back the amount you have borrowed, adjusted for inflation (according to the Retail Prices Index). So the amount you pay is equivalent in spending terms to the amount you borrowed.

You start paying back your student loans through the tax system, after you have finished your studies and are earning over £15.8k pa – you pay 9% of those earnings over the £15.8k threshold. So –

  • If you are earning £15,790, you pay nothing.
  • If you earn £25,000 a year, you will pay 9% of £9200 (ie the difference between £15.8k and £25k). This means you will pay £828 pa (£69 a month).
  • If you earn £50,000 a year, you will pay 9% of £34,200 (ie the difference between £15.8k and £50k). This means you will pay £3078 pa (£256.50 a month).
  • If your earnings never reach £15.8k, you never repay your loan or any part of it.
  • The outstanding balance of your loan is cancelled after 25 years (35 years if you live in Scotland), if you die, or if you become permanently unable to work through illness or disability.
  • You do not need to repay any money paid in grants, bursaries or scholarships

More information can be found on the student support websites for England, Scotland, Wales and Northern Ireland.

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