Student loan deductions are repayments of your student loan that your employer collects automatically from your salary and sends to HMRC. The HMRC will then send this money to the Student Loan Company. This is all done through PAYE.
How HMRC calculates your student loan deductions
How much you pay is based on your Student Loan Plan, which in turn is based on when you studied and how much you earn:
- Student Loan Plan 1 (SLP1): you’ll have this if you were living in Scotland or Northern Ireland when you started your course, or if you were living in England or Wales and started your course before September 2012. You’ll pay 9% of what you’re earning above the threshold (£20,195 in 2023/24).
- Student Loan Plan 2 (SLP2): you’ll have this plan if you were living in England or Wales when you started your course, and if you started it after September 2012. You’ll pay 6% of what you’re earning above the threshold (£27,295 in 2023/24).
- Postgraduate Loan (PGL): you’ll pay 6% of your earnings above the threshold (£21,000).
- Mortgage Style Loan (MGL): this is an older kind of loan – you only have this if you started studying before September 1998. MGLs are more similar to traditional loans.
When do student loan deductions start and stop?
- The earliest you’ll have to start repaying your student loan is 6th of April of the year after you graduate – and, of course, once you’ve started earning above the thresholds we just mentioned
- Once you’ve finished paying your loan, HMRC will tell your employer, who’ll then stop your deductions
- Most student loans (with the exception of MGLs) are completely written off 30 years after you started repaying them
What if you’re not on PAYE?
- If you’re self-employed: you’ll pay your student loans through your Self Assessment tax return
- If you’re overseas for three months or more: you’ll need to tell the Student Loan Company