What Student Loan Plan am I on?

Understanding which student loan plan you are on in the UK is essential for managing your repayments effectively and understanding how much you will need to repay. There are several different student loan repayment plans, each with its own rules for interest rates, repayment thresholds, and terms. This article will explain how to determine which student loan plan applies to you, the differences between the various plans, and how they affect your repayments.

What Are the Different Student Loan Plans?

There are four main student loan repayment plans in the UK:

1. Plan 1: This applies to students who took out loans before 1 September 2012.

2. Plan 2: This applies to students who took out loans on or after 1 September 2012.

3. Plan 4: This applies to students from Scotland.

4. Postgraduate Loan: This applies to students who took out a loan for postgraduate courses.

The plan you are on determines your repayment threshold (the income level at which you start repaying your loan), the interest rate applied to your loan, and when your loan will be written off.

How Do I Know Which Student Loan Plan I Am On?

The plan you are on depends on when and where you took out your loan, as well as the type of course you were studying. Here’s how to figure out which plan applies to you:

Plan 1

You are on Plan 1 if:

• You are an undergraduate student from England or Wales and started your course before 1 September 2012.

• You are a student from Scotland or Northern Ireland (regardless of when you started your course).

Repayment for Plan 1 loans begins once you earn over £22,015 per year. The interest rate is either the Retail Price Index (RPI) or 1% above the Bank of England base rate, whichever is lower.

Plan 2

You are on Plan 2 if:

• You are an undergraduate student from England or Wales who started your course on or after 1 September 2012.

Repayment for Plan 2 loans begins when your income exceeds £27,295 per year. The interest rate is based on your income and ranges from RPI to RPI + 3%.

Plan 4

You are on Plan 4 if:

• You are a student from Scotland and started your course on or after 1 September 1998.

Plan 4 works similarly to Plan 1, but the repayment threshold is higher at £27,660 per year.

Postgraduate Loan

You are on a Postgraduate Loan plan if:

• You took out a loan for a Master’s degree or Doctoral degree in England or Wales.

The repayment threshold for Postgraduate Loans is £21,000 per year, and the interest rate is RPI + 3%.

How Do the Plans Affect Your Repayments?

Your student loan plan affects how much you repay, the interest applied to your loan, and when the loan is written off.

Repayment Thresholds

Each plan has a different repayment threshold, which is the minimum income you need to start making repayments. If your income is below the threshold, you do not make any repayments. Here are the current repayment thresholds for each plan:

• Plan 1: £22,015 per year.

• Plan 2: £27,295 per year.

• Plan 4: £27,660 per year.

• Postgraduate Loan: £21,000 per year.

You repay 9% of your income above the threshold (6% for Postgraduate Loans).

Interest Rates

The interest rate applied to your loan varies by plan and can also depend on your income. For Plan 1 and Plan 4 loans, the interest rate is the RPI or 1% above the Bank of England base rate, whichever is lower. For Plan 2 and Postgraduate Loans, the interest rate is RPI + 3% while you are studying, and the rate after graduation depends on your income.

Loan Write-Off

Each loan plan has a specific period after which any remaining loan balance is written off:

• Plan 1: The loan is written off 25 years after the April you become eligible to repay or when you turn 65, whichever comes first.

• Plan 2: The loan is written off 30 years after the April you become eligible to repay.

• Plan 4: The loan is written off 30 years after the April you become eligible to repay or when you turn 65, whichever comes first.

• Postgraduate Loan: The loan is written off 30 years after the April you become eligible to repay.

What Happens If You Have Multiple Plans?

If you have loans under more than one plan, such as a Plan 2 loan for your undergraduate studies and a Postgraduate Loan for a Master’s degree, you will need to repay both. However, the repayments are calculated separately:

• You will repay 9% of your income above the threshold for your Plan 1, 2, or 4 loan.

• You will repay 6% of your income above the threshold for your Postgraduate Loan.

How to Check Your Student Loan Plan

If you’re unsure which plan you are on, you can check your Student Loans Company (SLC) account. This will show you:

• The type of loan you have (Plan 1, 2, 4, or Postgraduate).

• How much you owe.

• How much interest has been added to your loan.

• Your current repayment status.

Conclusion

Understanding which student loan plan you are on is crucial for managing your loan repayments and knowing when you will start repaying, how much you will need to repay, and how much interest is applied to your loan. By knowing the details of your loan plan, you can plan your finances more effectively and make informed decisions about voluntary repayments or managing your loan balance.

If you are still unsure about your loan plan, log into your Student Loans Company account or contact them directly for more details.