Understanding student loans is not rocket science, but we are here to help you understand the repayment process. If you ask yourself, “How do you calculate your student loan repayment?” we are here with the answer. Understanding how student loan repayments work is important when planning and paying back the borrowed amount.

In the UK, the amount you must pay towards the student loan depends on your income and the type of plan you are on. Therefore, by knowing repayment thresholds and the rates you will be expected to pay, you can quickly determine how much you will have to pay each month.

This blog will guide you through the different types of student loans, their payment thresholds, and how to calculate your student loan repayment based on your earnings. You must get the correct information about your repayment schedule to avoid such shocks.

Overview of the UK Student Loan Repayment Plan

Student loans in the UK are also grouped into different categories depending on where one was studying and the year of enrollment.

They have conditions on when the repayments begin, the amount above which one is required to start repaying, and the interest rates to be paid. It is essential to calculate your student loan repayment plan to determine how much you have to pay back.

Plan 1: The first plan is for students from Northern Ireland or those who began their course before 1 September 2012. This plan has slightly lower reimbursement and interest rates than the others.

Plan 2: For students from England and Wales who commence their course after the 1st of September, 2012. It has a higher repayment limit and flexible interest rate depending on the borrower’s income.

Plan 3: Loans for postgraduate students who began a Master’s course after 1 August 2016 or a Doctoral course after 1 August 2018. As stated earlier, this plan’s repayment terms differ from those offered to undergraduate students.

Plan 4: For individuals from Scotland who began their program before the 1st of September 2012. It is about the repayment terms in Scotland, which has its way of determining repayment thresholds and interest rates.

Plan 5: Students from England commencing the course on or after August 2023. It is a new policy that applies to undergraduate students in England and has a different repayment structure.

Repayment Thresholds and Interest Rates (Effective from 6 April 2025)

Repayment thresholds determine when you start repaying your loan, and interest rates affect how much your loan grows over time. As of 6 April 2025, the details are as follows:

• Plan 1:

Repayment Threshold: £26,065 per year (£2,172 per month or £501 per week).​GOV.UK

Interest Rate: The lower of the Retail Price Index (RPI) or the Bank of England base rate plus 1%. For 1 September 2024 to 31 August 2025, the RPI is 4.3%, so the interest rate is 4.3%. ​GOV.UK

• Plan 2:

Repayment Threshold: £28,470 per year (£2,372 per month or £547 per week).​

Interest Rate: While studying and until April after leaving the course, the rate is RPI plus 3% (7.3%). Post-study, it varies based on income, ranging from RPI (4.3%) for incomes up to £28,470, increasing to RPI plus 3% (7.3%) for incomes above £51,245. ​GOV.UK

• Plan 3 (Postgraduate Loans):

Repayment Threshold: £21,000 per year (£1,750 per month or £403 per week).​

Interest Rate: RPI plus 3%. From 1 September 2024 to 31 August 2025, this is 7.3%. ​GOV.UK

• Plan 4:

Repayment Threshold: £32,745 per year (£2,729 per month or £630 per week).​

Interest Rate: RPI. From 1 September 2024 to 31 August 2025, this is 4.3%. ​

• Plan 5:

Repayment Threshold: £25,000 per year (£2,083 per month or £480 per week).​GOV.UK

Interest Rate: RPI. From 1 September 2024 to 31 August 2025, this is 4.3%.

Calculating Your Student Loan Repayment – Monthly

The first step to understanding your repayment terms and schedule is to be able to calculate your student loan repayment amount. These simple steps will make this feel like a breeze to you.

First, you need to understand which of the student loan repayment plans applies to you. Your plan will depend on the institution you attended and when you began your course. As we discussed, it may be Plan 1, Plan 2, Plan 3, Plan 4, or Plan 5.

Self-employed persons must evaluate their gross and total income before tax is deducted. The total gross income is your wages and/or salary, any extra hours worked, and bonuses.

Subtract the Repayment Threshold: Every repayment plan has a specific income minimum limit. This threshold must be deducted from your monthly income to get the amount. The threshold is the amount of money you must earn before the repayment begins. For instance, for Plan 1, the WTC is £2,082 per month; however, for Plan 2, the WTC is higher at £2,274.

Repayment Percentage: After deducting the repayment threshold, you can divide the remaining amount by the repayment percentage. For most plans, the payment is at a rate of 9%, while for postgraduate loans, commonly known as plan three, it is at 6%. After doing this, you will have the monthly amount you will be paying.

Conclusion

Calculate your student loan repayment, understand your loan plan, know your income, and apply the correct repayment rate. By staying updated, you’ll manage your student loan more effectively. Need help with your student loans or finances? Contact Enrollmate for expert advice tailored to your needs!