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Understanding repayment

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Exchange editorial team

Providing up-to-date information about our student finance products and services.

Publication date: 20 December 2017

When do students repay?

Full-time students will be due to start repaying the April after they leave their course. Part-time students will be due to start repaying the April after they leave their course, or the April four years after the start of their course, whichever comes first.

Students will only need to start making repayments if their income is over the repayment threshold. The current UK threshold is £21,000 a year, £1,750 a month or £404 a week. It is expected to rise to £25,000 a year from 6 April 2018.

How much do students repay?

The amount they repay depends on their income and not how much they borrowed.

They’ll repay 9% of their income over the threshold, and if their income falls below the threshold, their repayments will automatically stop.

Here are some examples based on the expected UK threshold:

Income each year before

tax

Monthly income before tax

Approximate monthly

repayment

£25,000

£2,083

£0

£27,000

£2,250

£15

£29,500

£2,458

£33

£31,000

£2,583

£45

£33,000

£2,750

£60

£35,000

£2,917

£75

Parliament must approve proposed changes to repayment thresholds set for April.

How do students repay?

Repayments are collected through the UK tax system, either:

  • through PAYE, where employers will take repayments directly from their salary at the same time as tax and National Insurance
  • through self-assessment if they are self-employed

If the student lives abroad when they ­finish their course, they need to contact us before they leave the UK so we can make arrangements for them to repay. Due to differences in living costs, the repayment threshold in the country they’re living in may be different from the UK threshold.

Interest rates

Interest is charged on student loans from the day we make the ­first payment until the loan is repaid in full or cancelled. Any loan remaining after 30 years will be cancelled.

The interest rate is based on the UK Retail Price Index (RPI) and will vary depending on their circumstances.

Student's circumstances

Interest rate

While the student is studying up until the April after they finish or leave their course

Retail Price Index (RPI) plus 3%

From the April after they finish or leave their course

Interest will be based on their income:

£21,000 or less = RPI

Between £21,000 and £41,000 = RPI plus up to 3%, depending on their income

£41,000 and over = RPI plus 3%

The interest rate is updated once a year in September using the RPI figure from March of that year.

For more information, visit our Repayment Quick Start Guide.

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