If you have a student loan, have finished your studies and entered the workforce you must begin to make loan repayments from the April after you have finished your studies or when your income begins to exceed the annual threshold. The annual threshold amounts are currently £18,935 for plan 1 and £25,725 for plan 2. The Department for Education has confirmed that the thresholds will increase to £19,390 for plan 1 and to £26,575 for plan 2 from 6 April 2020.
The terms of loan repayment for courses of study started before 01 September 2012 are referred to as 'Plan 1', and those started after 01 September 2012, are referred to as 'Plan 2'. Repayments are deducted at a rate of 9% of income over the threshold. The threshold for postgraduate loans is £21,000 (no change for 2020-21) and repayments are deducted at a rate of 6%
The loans are also subject to varying levels of interest. The interest rates for Plan 2 repayments are based on the Retail Prices Index plus a variable rate dependent on income. The interest rates for Plan 1 repayments are significantly lower than for Plan 2 repayments.
Student Loans are part of the government’s financial support package for students in higher education in the UK. They are available to help students meet their expenses while they are studying. It is HMRC’s responsibility to collect repayments if you are working in the UK. The Student Loans Company (SLC) is responsible for collecting the loans of borrowers outside the UK tax system.