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This is what the student loan repayment changes mean for you


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In the biggest change to student finance since 2012, the  repayment threshold for student loans has risen to £25,000 per year.

This change means people who have taken out loans since 2012 will only start paying back their loans once they are earning above £25,000 a year – up from £21,000.

According to the government, around 600,000 university leavers will benefit from this change, with hundreds of borrowers saving up to £360 a year.

However, middle-earning graduates will save the most, saving up to £15,700 in repayments over their lifetimes, while lower-earning graduates, will see a smaller reduction in lifetime repayments, research carried out by the Institute for Fiscal Studies calculates.

Commenting on the changes, Universities Minister Sam Gyimah said:

“The increase in the student repayment threshold marks a key milestone and is another example of the steps the Government is taking to support those in higher education.

“The increased repayment threshold applies to any student who has taken out a post-2012 undergraduate student loan or Advanced Learner Loan.

“Graduates living in the UK will not be required to take action in order to receive the saving. Repayments will be calculated automatically by employers (for those paid through PAYE) or as part of the Self-Assessment return to HMRC.”

Students who have taken out loans since 2012, when tuition fees were increased to £9,000 are on plan 2, whereas students who took out loans between 1998 and 2011 are on plan 1.

Based on a borrowers annual earnings, this is what the changes mean for graduates on plan 2:

  • £25,000 per year repays £0 per month instead of £30
  • £27,000 per year repays £15 per month instead of £45
  • £30,000 per year repays £37 per month instead of £67
  • £33,000 per year repays £60 per month instead of £90
  • £35,000 per year repays £75 per month instead of £105
  • £40,000 per year repays £112 per month instead of £142
English students on plan 1 are also set to benefit from a change, while they are still required to repay their loans if they earn above £17,000, from April 2019 the repayment threshold for them - as well as students from Wales, Scotland and Northern Ireland - will rise annually in line with average earnings.



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