So you finally come to the end of your studies and are looking forward to entering the next phase of your life into your chosen career path. However, you and your friends may be asking yourself a few questions.
This page aims to answer some the frequently asked questions about loans and overdrafts and hopefully enable you to deal efficiently with all your money matters that may affect you at this time.
Q. When do I start making repayments on my student loans?
- Repayments start in the first new tax year following your course. If you left in Summer 2007, then repayments start in April 2008.
- You will be contacted by the Student Loan Company (SLC) in Jan/Feb just before your repayments are due to start.
- Even if you begin work immediately after leaving university, you will not be asked to commence repayments until the start of the new tax year
- Money that you earn before the start date of the tax year will not be taken into account when your repayments are worked out.
- Tax years run from 6th April and end on 5th April the following year
- Repayments are taken direct from your salary and details will be shown in your payslips from your employer
- You can, if you wish, make additional voluntary repayments over and above those taken from your salary, by for example cheque or credit card etc
- It is advisable to keep a record of all repayments made (compulsory and voluntary)
- Make sure you keep the SLC up to date with any changes to your address and contact details
Q. So how much will it really cost me each month for my student loan repayments?
If you are working in the UK Tax System the amount you pay back is a percentage of your earnings over the £15,000 a year threshold or earnings over £1,250 a month (figures set by government). This is about 9% of your income.
Income each year |
Monthly repayment |
Repayment as a % of your total income |
| £15,000 or less |
£0 |
0% |
| £16,000 |
£7 |
0.6% |
| £17,000 |
£15 |
1.1% |
| £18,000 |
£22 |
1.5% |
| £19,000 |
£30 |
1.9% |
| £20,000 |
£37 |
2.3% |
| £21,000 |
£45 |
2.6% |
| £22,000 |
£52 |
2.9% |
| £23,000 |
£60 |
3.1% |
| £24,000 |
£67 |
3.4% |
| £25,000 |
£75 |
3.6% |
- Student loans are not like a typical bank loan as the interest rate is very low.
- The rate of interest you are charged on your loan is in line with the general rate of inflation
- As of September 2006 this was set at 2.4%
- The government sets this rate annually each September
- Interest is charged on the balance of your loan that is left
Q. What if I work or live abroad? How do I repay my loans then?
- If you are working outside of the UK tax system then your loans cannot be automatically deducted from your salary.
- In this case you must inform the SLC and set up arrangements to make repayments directly to them.
- The amount you will repay will depend on the earnings threshold for that country, which may not be the same as the £15,000 figure for the UK. The table below gives examples of the earnings thresholds for other countries:
| Band |
Price level index
(UK= 100) |
*Repayment threshold
(UK £15,000) |
Countries using the latest available price index figures |
| A |
Less than 30 |
£3,000 |
Currently does not apply to any countries but may change depending on price changes compared to the UK |
| B |
More than 30
but less than 50 |
£6,000 |
Bulgaria, Macedonia, Romania, Lithuania, Latvia |
| C |
More than 50
but less than 70 |
£9,000 |
Poland, Slovakia, Turkey, Czech Republic, Estonia, Croatia, Hungary, Malta, Slovenia |
| D |
More than 70
but less than 90 |
£12,000 |
Portugal, Greece, Spain, Cyprus, USA |
| E |
More than 90
but less than 110 |
£15,000 |
Italy, Belgium, Austria, Germany, Netherlands, France, Luxemburg, Finland, Sweden, Japan |
| F |
More than 110
but less than 130 |
£18,000 |
Ireland, Switzerland, Denmark, Norway, Iceland |
| G |
More than 130 |
£21,000 |
Currently does not apply to any countries but may change depending on price changes compared to the UK |
The amount you need to repay will be converted into Pounds Sterling and any bank charges you may incur by paying from overseas is your responsibility. The income thresholds for individual countries can change annually.
I cannot see any loan payments on my payslip but I should be paying some?
- If repayments do not start, ask you employer to check this out for you
- If they cannot sort the payments out then you should contact the SLC
- Always keep a check on what you should be paying and when - it is your responsibility
Q. My pay changes every month, sometimes I earn more and other months much less, how can I keep track of repayments?
