Going to university is an exciting time for students. But it can also be a costly occupation that most cannot afford without some form of financial help. As a result, around 1.5 million students each year borrow money from lenders such as the Student Loans Company to help fund their academic endeavours.
To finance course fees and living expenses, students usually take out both a tuition fee and a maintenance loan. Due to this, students graduating from English universities will have racked up an average of £45,000 in student debts. However, most will not be able to pay their loan back immediately after graduating and will have to do so over a considerable period of time.
Instead, those with student loans will make repayments towards their debt and pay back a percentage of their income over several years. But with student loans being such a long commitment, it’s understandable to wonder whether they get written off. The answer is yes, and we’ll tell you exactly when this happens.
In the meantime, however, if you are one of the many students with a loan, you will likely make repayments towards it. With this in mind, we’ll also explain how to know which repayment plan you’re on when you’ll be expected to start making repayments, and how much you’ll pay. So, let’s get started!
When is a student loan written off?
Generally, student loans will be written off after 25 or 30 years. Some loans are written off when you reach the age of 65. Exactly when your student loan expires and gets written off depends on the repayment plan you are on.
Four repayment plans determine when you start paying back your student loan and how much you pay back. You won’t get to pick which plan you’re on as they are automatically assigned based on student nationality, where the course is, and the year the course started. In the next section, we’ll go into more detail about each repayment plan, including how to determine which one you’re on and when they will be written off.
What are the student loan plans?
As we’ve mentioned, there are four different repayment plans. Let’s explore them in more detail.
Repayment Plan 1
Repayment Plan 1 is for:
- English or Welsh students who started an undergraduate course anywhere in the UK before 1 September 2012
- Northern Irish students who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998
- EU students who started an undergraduate course in England or Wales on or after 1 September 1998 (but before 1 September 2012)
- EU students who started an undergraduate course or postgraduate course in Northern Ireland on or after 1 September 1998
If you are on Plan 1, your loan will be written off depending on the academic year it was taken out. These are as follows:
- Academic year 2005 to 2006, or earlier: the loan will be written off when you turn 65.
- Academic year 2006 to 2007, or later: the loan will be written off 25 years after the April you were first due to repay it.
Repayment Plan 2
Repayment Plan 2 is for:
- English or Welsh students who started an undergraduate course anywhere in the UK on or after 1 September 2012
- EU students who started an undergraduate course in Wales or England on or after 1 September 2012
- Anyone who took out an Advanced Learner Loan on or after 1 August 2013
- Anyone who took out a Higher Education Short Course Loan on or after 1 September 2022
If you are on Plan 2, your student loan will be written off 30 years after the April you were first due to start paying your loan back.
Repayment Plan 4
Repayment Plan 4 is for:
- Scottish students who started an undergraduate or postgraduate course anywhere in the UK on or after 1 September 1998
- EU students who started an undergraduate or postgraduate course in Scotland on or after 1 September 1998
If you are on Plan 4, your student loan will be written off depending on the academic year it was taken out. These are as follows:
- Academic year 2006 to 2007, or earlier: the loan will be written off when you turn 65, or 30 years after the April you were first due to repay your debt — whichever one comes first
- Academic year 2007 to 2008, or later: the loan will be written off 30 years after the April you were first due to repay it.
Postgraduate Loan repayment plan
You’ll be on a Postgraduate Loan repayment plan if you are:
- An English or Welsh student who took out a Postgraduate Master’s Loan on or after 1 August 2016
- An English or Welsh student who took out a Postgraduate Doctoral Loan on or after 1 August 2018
- An EU student who started a postgraduate course on or after 1 August 2016
When a postgraduate loan is written off depends on your nationality or where you are studying. If you’re an English or Welsh student, your postgraduate loan will be written off 30 years after the April you were first eligible to repay your student loan. If you’re a postgraduate student from Northern Ireland studying in the UK, you’ll be on Plan 1 instead. Therefore, when your loan is written off will depend on the academic year it was taken out.
Similarly, if you are a postgraduate student from Scotland, or an EU student studying a postgraduate course in Scotland, you’ll be on Plan 4. When your loan is written off will also depend on the academic year the loan started. You can check the previous sections to find out exactly when this will be.
When do you start paying back your student loan?
You will only start making student loan repayments when your income exceeds the threshold for the repayment plan you are on. If you earn over the relevant threshold, the earliest you’ll be expected to repay your student loan will be the April after you finish your course. However, if your course is longer than four years (e.g. if it’s a part-time or Postgraduate Doctoral course), the earliest you’ll start repaying your loan is the April four years after the course start date.
What are the student loan repayment thresholds?
Student loan repayment thresholds change each year on the 6 April. Additionally, the thresholds differ depending on your student loan repayment plan. Each plan has a weekly and monthly income threshold, and you won’t repay your student loan until your pre-tax salary exceeds one of these thresholds.
The repayment thresholds (before tax and other deductions) for each repayment plan are as follows:
|Plan 1||Plan 2||Plan 4||Postgraduate Loan|
When you are eligible to start repaying your student loan, you’ll repay a percentage of the amount you earn that exceeds the threshold. The percentage you repay depends on which repayment plan you’re on. These are as follows:
- Plans 1,2, or 4: you’ll pay 9% of the amount you earn over the relevant threshold
- Postgraduate Loan: you’ll pay 6% of the amount you earn over the relevant threshold
For example, say you are on Plan 2, earning an annual income of £30,000 before tax, and you are paid monthly. Your monthly income is £2,500, and therefore £226 over the Plan 2 monthly threshold of £2,274. This means you would pay 9% of the £266 each month, which is £20.34 per month.
You may also be on two repayment plans. For example, if you have a Postgraduate Loan and a Plan 2 loan. If this is the case, you’ll pay back 6% of any income that exceeds the Postgraduate Loan repayment threshold and 9% of any income that exceeds the Plan 2 student loan repayment threshold. So, say your annual income is £28,800 before tax and deductions and you are paid monthly. Your monthly income is £2,400, meaning each month you will pay back:
- £39 towards your Postgraduate Loan. This is because you’ll pay 6% of £650, which is the amount of income that exceeds the threshold (£2,400 minus £1,750).
- £11.34 towards Plan 2. This is because you’ll pay 9% of £126, which is the amount of income that exceeds the Plan 2 threshold (£2,400 minus £2,274).
It’s also worth noting that your loan repayments will be automatically deducted from your wages if you’re employed. They will also be adjusted if your wages change. If you stop working or your wages fall below the relevant threshold for your repayment plan, your repayments will stop automatically. Or, if your wages increase, you’ll pay more towards your student debt. However, if your wages are reduced, and you end up overpaying, you can request a refund at the end of the tax year.
Do student loan interest rates change?
Yes, student loan interest rates are subject to change throughout the year. The reason is that interest rates are based on either the Retail Price Index or the Bank of England base rate (plus 1%), whichever is lower. However, these fluctuate due to inflation, which measures the cost of living. Generally, as the cost of living rises, so do interest rates.
For example, the following table shows how the interest rate on Plan 1 loans changed between 1 September 2019 to 1 September 2022.
|1 September 2022 to 19 October 2022||2.75%|
|3 March 2022 to 31 August 2022||1.5%|
|13 January 2022 to 2 March 2022||1.25%|
|1 September 2021 to 12 January 2022||1.1%|
|1 September 2020 to 31 August 2021||1.1%|
|7 April 2020 to 31 August 2020||1.1%|
|1 September 2019 to 6 April 2020||1.75%|
Interest rates are usually set on 1 September each year, based on the previous March’s RPI. However, they can also change during the rest of the year as well.
Current student loan interest rates
The current interest rates for student loan repayment plans are as follows:
- Plan 1: 3.25% interest
- Plan 2: 6.3% interest. This interest rate is usually calculated as the Retail Price Index (RPI) plus up to 3%, dependent on your income and circumstances. However, due to inflation, it is currently capped at 7.3% until 31 August 2023.
- Plan 4: 3.25% interest
- Postgraduate Loan: 6.3% interest. Like Plan 2, the Postgraduate Loan interest rate is calculated as the RPI plus up to 3%, and it is also capped at 7.3% until August next year.
You’ll start being charged interest from the day you make your first repayment towards your student debt until your loan is fully paid off or written off.
Can your student loan increase even if you are paying it back?
Yes, your student loan debt can increase even if you make repayments. The reason is that student loans are subject to interest rates — this is simply the percentage that you pay on top of the borrowed amount. So the longer you have your student loan, the more interest you will accrue on top of your student loan. And as we’ve previously mentioned, interest rates on student loans can fluctuate due to economic factors such as inflation. This means that if interest rates increase, you’ll end up owing more money despite making repayments.
Rising interest rates are a cause for concern for many due to worries that their loan debt will increase and become a life-long commitment that will affect their ability to get loans in the future. But this isn’t the case, as student loans don’t affect your credit score. Furthermore, the amount you owe in total should not be your main concern, but rather the amount you’ll repay.
If you have a student loan, you’ll pay it back as a percentage of your earnings that exceeds the relevant threshold for the loan repayment plan you are assigned to. This means you’ll only be eligible to repay your loan if you earn over the relevant income threshold. If you’re not eligible to repay your student loan, you also won’t be chased by debt collectors.
Finally, if you don’t pay back your student loan in full, it will eventually be written off. This usually happens after 25-30 years or when you turn 65. This will, however, depend on the repayment plan you’re on.