Paying back a Student Loan

Most people pay back their student loans in the same way as they pay their income tax. If you are employed in the UK, your student loan repayments will be collected through the Pay As You Earn (PAYE) system.

You don’t start paying back your loans until you reach the repayment threshold. This means that you will begin making repayments when your gross earnings are more than:

• £1,250 a month; or
• £288 a week

If you are paid at different intervals – for example, fortnightly or every four weeks – these figures are adjusted in line with the annual threshold (£15,000 per year).

If you receive income from sources other than employment (from savings or investments for example) remember that this counts towards your total.

How much you have to repay

Your student loan repayments will be nine per cent of anything you earn over the relevant thresholds. Remember that this isn't the same as nine per cent of your total income - you only make repayments on what you earn above the threshold.

If you earn less than the threshold or thresholds that apply to you, you don’t have to make any repayments.

How interest on your student loan is calculated

The interest rate charged on student loans is linked to the rate of inflation, based on the Retail Prices Index. The interest rate for student loans applies from 1 September to 31 August each year. From 1 September 2007 to 31 August 2008, the rate is 4.8 per cent.