What You Should Know About Repaying Student Loans

If you have taken out a Student Loan since August 1998 then HM Revenue and Customs (HMRC) is responsible for collecting your repayments.

Our guide looks at when, what and how you go about repaying your Student Loan.

When will I start repaying my Student Loan?

You will not have to make any repayments to your Student Loan until at least the 6^th April after you leave your course.  So, if you graduated and left university in July 2011, the earliest your Student Loan repayments would start would be 6 April 2012.

You do not make any repayments to your Student Loan unless you earn at least £15,000 per year (£1,250 a month or £288 a week).  If your income is below £15,000 then you will not have to make any repayments until your earnings exceed this amount.

How much will my Student Loan repayments be?

The amount that you pay back is normally calculated as 9 per cent of your income over the starting limit.

For example, you leave college/university in June 2010 and start working in September 2010 earning £24,000 a year (£2,000 per month).

You will start making your repayments in April 2011.  Your repayments will be 9 per cent of your income above the starting limit.  This means you’ll pay 9 per cent of £750 (£2,000 minus starting limit of £1,250) equivalent to £67.50 per month.

If you earn over £2,000 a year in savings interest it may affect the amount that you have to pay.

How do I make my Student Loan repayments?

If you are employed, HMRC will tell your employer when to start deducting your Student Loan repayments from your wages.  Your employer will automatically make the appropriate deductions every pay day.

If your wages change on a weekly or monthly basis then the amount of your Student Loan repayment will also change.  For example, if your income falls below the starting limit in any given week/month you will not make a repayment in that week/month.

If you are self employed, you should tick the relevant box on your tax return to indicate that you have a Student Loan.  Your student Loan repayment will therefore be calculated with your overall tax bill and it will normally be payable by 31 January every year.