Repayment of a student loan
Generally, students do not make any repayments while studying. Repayments start in the April after they have completed or otherwise leave the course and earn over a certain amount (known as the ’salary threshold’). The salary threshold is adjusted each year. The salary threshold is £31,395 in 2024/25. If a client’s income falls below the salary threshold, payments stop and only begin again when the salary threshold is met.
The repayment rate is 9 per cent of any income earned above the salary threshold. If income changes, either falling or rising, the repayment amounts automatically change to reflect this.
Example monthly repayments 2024/25
Annual income before tax | Approximate monthly repayment |
|---|
£31,395 | £0 |
£32,000 | £4 |
£35,000 | £27 |
£37,000 | £42 |
£40,000 | £64 |
Repayments are normally made by deductions from salary through the PAYE system. If the client is self-employed, repayments are made through the self-assessment tax process. They must tick the box on the self-assessment return stating they have a student loan and budget for student loan payments when they submit their self-assessment tax return to pay HMRC at the end of January.
Clients can choose to pay off their student loans sooner by:
•paying extra each month;
•making an extra one-off payment;
•paying it off in full.