Student loans explained

Your student loan will probably be the biggest amount of money you’ve ever borrowed. You might have heard stories about large sums of student debt and high interest rates, but what you might not know is that your student loan isn’t like other types of debt. On this page we’ll break it down, so you can set your worries about student loans and how you’ll repay the debt aside. 

A student loan is broken down into two parts. Tuition fee loan (to pay your course fees) and maintenance loan (for living costs). You don’t have to apply for either or both, but most students will require these loans to fund their studies.

How much are Plan 5 Student Loan repayments?

Currently, if you earn over £25,000/year (£2,083/month or £480/week) before tax you will start to repay your student loan.

However, you only pay 9% of the amount above the threshold. For example, if you earn £35,000/year (£10,000 above the threshold), you will pay 9% of £10,000 for the year, which is £900.

Here's what your monthly repayments could look like (if you're self-employed, you can use this as a guide to how much you should be putting away for your annual tax return):

As Plan 5 Student Loans were introduced in August 2023, the first repayment will be no earlier than the 2026/27 tax year.

Student Loan repayments also come with weekly and monthly thresholds. If you have a salary that falls below the annual threshold, it could mean that you end up crossing the threshold if you receive a bonus or take on extra work. At the end of the financial year, if your annual earnings are still below the annual repayment threshold, you would be entitled to a refund.

Plan 5 student loans will be written off 40 years after you're due to start making repayments. This is a lot longer than previous plans, so more students are likely to pay the loan off in full. 

If the loan is written off, you would no longer need to make repayments – even if you haven't paid it all back.