With September underway, the season for new college and university-goers has begun. But with it comes a lot of questions. One of the biggest questions of all is – when are student loans written off?
But before your student loan can be written off, it is important to learn about student loan repayment and interest rates, so you know exactly what to expect before it gets to that point. Keep reading for an in-depth guide on the repayment and write-off terms of student loans.
What is a Student Loan?
A student loan is an agreement by which a new college or university student borrows money from the government in order to pay for their education. The student must pay the money back after they have finished studying and start earning over a certain amount.
For more information on the different types of student loans, how they work, who is eligible for them and what they cover, click here.
How Does Student Loan Repayment Work?
When you start repaying your student loan, how much you pay depends on which repayment plan you are on. Your repayment plan is based on when you started your college or university course.
If you’re employed and are earning over the repayment threshold for your repayment plan, your student loan repayments will be automatically deducted from your pay at the same time as tax and National Insurance. Your payslips should show how much has come out.
Even if you leave your course early, you still need to pay your tuition and/or maintenance loans back. This does not include grants and bursaries. If you receive more money than the type of student finance you are entitled to, you will also have to repay these overpayments.
Current Student Loan Repayment Plans
The following student loan repayment plans are correct as of 2024 UK Government information:
- If you started your course before the 1st of September 2012, you are on Plan 1.
- If you started your course between the 1st of September 2012 and the 31st of July 2023, you are on Plan 2 (depending on some criteria).
- If you applied to Student Awards Agency Scotland, you are on Plan 4 (whether you studied an undergraduate or postgraduate course).
- If you started your course on or after the 1st of August 2023, you are on Plan 5 (depending on some criteria).
However, there is eligibility criteria for some of these plans, to read more about student loan repayment plans – click here.
It is also important to remember that if you have more than one student loan, you may be on multiple different repayment plans.
How Much Do I Repay?
How much money you pay back depends on how much you earn (including bonuses and any overtime) before tax and other deductions. There are different thresholds for each repayment plan. You’ll repay a percentage of your income over the threshold for your plan, depending on how often you get paid.
Current Student Loan Repayment Thresholds
The following student loan repayment thresholds are correct as of 2024 UK Government figures:
- Plan 1 – £24,990 (yearly), £2,082 (monthly), £480 (weekly).
- Plan 2 – £27,295 (yearly), £2,274 (monthly), £524 (weekly).
- Plan 4 – £31,395 (yearly), £2,616 (monthly), £603 (weekly).
- Plan 5 – £25,000 (yearly), £2,083 (monthly), £480 (weekly).
- Postgraduate loan – £21,000 (yearly), £1,750 (monthly), £403 (weekly).
Current Student Loan Interest Rates
How much interest you are charged depends on which repayment plan you are on. The following student loan interest rates are correct as of 2024 UK Government figures:
- 4.3% if you’re on Plan 1.
- 7.3% if you’re on Plan 2.
- 4.3% if you’re on Plan 4.
- 4.3% if you’re on Plan 5.
- 7.3% if you’re on a Postgraduate Loan plan.
If you have more than one job, are self-employed, are on more than one plan type or your income changes during the year, your interest rate will be different. For more information, click here.
When Are Student Loans Written Off?
When your student loan gets written off depends on which repayment plan you are on, excluding those on Plan 1 and Plan 4.
If you are on Plan 1 and were paid your first loan on or after 1st September 2006, your loans will be written off 25 years after the April you were first due to repay. If you were paid the first loan before 1st September 2006, your loans will be written off when you turn 65 years of age.
If you are on Plan 4 and were paid the first loan on or after 1st August 2007, your loans will be written off 30 years after the April you were first due to repay. If you were paid your first loan before 1st August 2007, your loans will be written off either when you turn 65 years of age, or 30 years after the April you were first due to repay – whichever comes first.
- Plan 2 – loans are written off 30 years after the April you were first due to repay.
- Plan 5 – loans are written off 40 years after the April you were first due to repay.
- Postgraduate from England or Wales – loans are written off 30 years after the April you were first due to repay.
- Postgraduate from Northern Ireland – Plan 1 write-off rules apply to you.
- Postgraduate from Scotland – Plan 4 write-off rules apply to you.
For more information on when your student loan gets written off or cancelled, click here.
If you are a full-time student from Wales, you may be able to get £1,500 of your maintenance loan written off. Click here for more information.
If you can no longer work due to illness or disability, SLC may be able to cancel your student loan if you claim certain disability benefits. You will need to provide evidence of this, e.g. a letter from your benefits agency and your customer reference number. You can use the Angel Advance benefits calculator to help you find out which benefits you are entitled to.
Free, Confidential Student Debt Advice
As the cost of living crisis continues, spending money on a limited income while studying can mean unaffordable debts, such as overdrafts and store cards. If you’re facing money worries, get free* confidential debt advice today. Contact us to speak to one of our friendly and knowledgeable debt advisers, who can help you decide on the best debt solution for you.
If all you need is some debt advice, there is no need to worry – there is no risk to receiving debt advice, as this won’t affect your credit score. The Online Debt Advice service is available any time, day or night, to help you in any way they can.
If you’d prefer to go online, our free and easy-to-use online tool can also help you weigh up the debt solutions available to you and give you the best recommendations for your unique situation on-screen, instantly.
*Our advice is free, but if you sign up for a debt solution, a fee will apply for some solutions.
