Student and postgraduate loan thresholds and rates
From 6 April 2025, new thresholds for student loan repayments will take effect, impacting borrowers across the UK. Whether you're on Plan 1, Plan 2, Plan 4, or repaying a postgraduate loan, here’s a breakdown of the latest changes and what they mean for you.
Student loans are a key component of the government’s financial assistance package for individuals pursuing higher education in the United Kingdom. These loans are designed to support students with their living and tuition expenses while studying. The responsibility for collecting repayments from borrowers in the UK lies with HM Revenue & Customs (HMRC). For those working outside the UK tax system, the Student Loans Company (SLC) is tasked with managing the repayment process.
Effective from 6 April 2025, the thresholds and repayment rates for various student loan plans will be as follows:
- Plan 1: £26,065
- Plan 2: £28,470
- Plan 4: £32,745
The loan repayment terms for students who commenced their courses before 1 September 2012 are categorised under 'Plan 1'. Those who began their studies after 1 September 2012 are subject to 'Plan 2' terms. Under these plans, repayments are set at a rate of 9% of income above the respective threshold.
Student loans taken out by borrowers in Scotland are classified as 'Plan 4' loans, with a repayment threshold of £32,745, and the repayment terms are similar to those of Plan 2 loans.
For postgraduate loans, the threshold remains unchanged at £21,000, with repayments deducted at a rate of 6% of income above this amount.
These loans are subject to varying interest rates, which are determined by the Retail Prices Index (RPI) and are also influenced by the borrower's income level. Specifically, the interest rate for Plan 2 repayments is variable, calculated as RPI plus an additional percentage that fluctuates according to income. The interest rates applied to Plan 1 repayments are usually significantly lower than those for Plan 2.
