The Salary Calculator has been updated to support the latest changes to student loan repayments which will take effect for some tax payers next April. For students who start their courses this autumn, the way that deductions will be calculated when they enter the workplace will be different from the deductions applied to students of previous years.

Students whose courses started before 1st September 2012 (including those of you who have completed your course and have even started repaying) will see no change, and will repay the loan with deductions of 9% of your salary which is over a threshold of £15,795 per year. This is as before, but it is now called “Plan 1”. If your course started after 1st September 2012 and you are resident in England or Wales, you will repay under “Plan 2”. Plan 2 repayments are also made at a rate of 9%, but only on salary over a threshold of £21,000 per year. This means that deductions will be lower, and repayment of the loan will take longer. Of course, most students who started their course this autumn will not be expecting to enter employment for a few years, and deductions are only made from the April after you finish your course. However, if your course is short or this will apply to you when you graduate and you would like to see how it will affect your take home pay, The Salary Calculator will show you if you tick the “Plan 2” box. Check out The Salary Calculator to see what your Student Loan deductions will be.

It is in fact possible to have a loan under Plan 1 and a loan under Plan 2 – for example, if you have studied on more than one course. In this case, the deduction from your salary is still just at 9% (over the Plan 1 threshold of £15,795), but the repayment is split between your two loans. Deductions due to salary between £15,795 and £21,000 go towards repaying the Plan 1 loan. Any deductions from salary over £21,000 go towards repaying your Plan 2 loan.

Plan 2 loans also have a different interest rates charged from Plan 1 loans, which at the moment are higher than Plan 1 interest rates. This, coupled with the lower monthly repayments made under Plan 2, means that students with Plan 2 loans will spend more time (and more money!) repaying their loans. Our sister site Loan Tutor has a student loan repayment tool which will allow you to estimate how long it will take you to repay your student loan given your salary, outstanding loan amount and repayment method (i.e. whether your course started after 1st September 2012 or not).

For more information about student loan repayment, see the Student Loan Repayment website.

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About The Salary Calculator, Student Loan

None of the content on this website, including blog posts, comments, or responses to user comments, is offered as financial advice. Figures used are for illustrative purposes only.

2 Comments to New – “Plan 2” Student Loans

  1. I am studying over six years.
    I will be 51 when I graduate. I am currently earning around £12,000 a year. Will my husbands income be included when calculating my repayments or will they be based on solely my income?
    And when will I have to start repaying?

  2. Emma on August 28th, 2015
  3. Hi Emma,
    I’m not aware of any situation where your husband’s income would be taken into account when working out your student loan repayments (although you can use his income to make voluntary repayments if you wish, which will help pay your loan off sooner). You will start repaying your loan the April after you finish your course, if your income is over the repayment threshold (currently £21,000 per year, for Plan 2 loans). More details are available on the Student Loans Repayment website.

  4. admin on August 29th, 2015

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