You’ll apply for student finance from Student Finance England when you’re at uni or college. But when the time comes to repay, you’ll make your repayments to the Student Loans Company.
The important thing to remember is that the amount you’ll repay will be based on how much you earn, not how much you borrow.
Once you leave your course, you’ll only repay when your income is above the repayment threshold. The current UK threshold is £27,295 a year, £2,274 a month, or £524 a week.
For example, if you earn £2,310 a month before tax, you’ll repay £3 a month. This is because £2,310 is £36 above the monthly threshold of £2,274, and 9% of £36 is £3 (rounded down to the nearest pound).
Look at the table for some more examples of how much you could repay.
|Yearly income before tax||Monthly income before tax||Monthly repayment|
If you stop working, or start to earn below the repayment threshold, your repayments will stop until you earn over the threshold.
You’ll make a repayment if you go over the weekly or monthly threshold at any point during the year, for example, if you get a bonus or work overtime. You can request a refund at the end of the tax year if your total income was below the annual repayment threshold.
If you leave your course early
You’ll still have to repay your loan, but the repayment process might be different.
- Full-time courses – you’ll be due to start repaying the April after you finish or leave your course, but only if you're earning over the repayment threshold. For example, if you graduate in June 2021, you’ll be due to start repaying in April 2022, if you're earning enough.
- Part-time courses – you’ll be due to start repaying the April four years after the start of your course, or the April after you finish or leave your course, whichever comes first, but only if you're earning over the repayment threshold.
How you'll repay depends on what you choose to do after your course:
- If you start work, your employer will automatically take 9% of your income above the threshold from your salary, along with tax and National Insurance.
- If you're self-employed, you’ll make repayments at the same time as you pay tax through self-assessment.
- If you move overseas, you’ll repay directly to the Student Loans Company, instead of having it taken automatically from your pay. The repayment threshold could be different from the UK, which means the amount you repay could be different. Find out more about repaying from overseas.
Interest is charged from the day the Student Loans Company makes your first payment to you or your uni or college, until your loan is repaid in full or cancelled.
The interest rate is based on the Retail Price Index or RPI, which measures changes to the cost of living in the UK. The interest rate is normally updated once a year in September, using the RPI from March of that year.
It's important to remember that the amount of interest you're charged doesn't affect the amount you'll repay each month.
How much interest you're charged depends on your circumstances:
- When you're at uni or college – while you're studying, up until the April after you leave your course, the interest charged will normally be RPI plus 3%.
- When you've left your course – from the April after you've left your course, interest will be based on your income, up to a maximum of RPI plus 3%.
- If you don't keep your details up-to-date – you'll normally be charged RPI plus 3%, whatever your income, until the Student Loans Company has all the information they need.