Student loan repayment thresholds to rise in April
Graduates with “Plan 1” loans who started studying between 1998 and 2011, plus Scottish and Northern Irish loans since 2012, will see the repayment threshold increase from £18,935 to £19,390 a year from 6 April 2020.
Those with “Plan 2” loans, which are English and Welsh loans for those who started university in or after 2012, will see the repayment threshold increase from £25,725 to £26,575 a year from the same date.
The repayment threshold for postgraduate loans will remain at £21,000 a year.
People with pre-1998 mortgage style loans, will see the deferment threshold rise from £30,737 to £32,347 a year from 1 September. The deferment threshold is the annual salary below which you can opt not to repay your loan.
Changes to interest rates
The interest rates on student loans will also change from 1 September 2019.
If you have a Plan 1 loan the rate is set as the lower of the RPI rate of inflation or the Bank of England base rate plus 1 per cent. So graduates with this type of loan will see their interest rate remain at 1.75 per cent.
People with a Plan 2 loan are charged an interest rate of RPI plus 3 per cent while studying, so from 1 September this group will be charged 5.4 per cent.
From the April after you graduate, you’ll be charged variable interest, dependent upon your income.
If you earn £26,575 or less you’ll be charged RPI (2.4 per cent). The rate increases on a sliding scale up to RPI + 3 per cent (5.4 per cent), where your income is £47,835 or more.
From 1 September 2019 until 31 August 2020, the interest rate for borrowers in England taking out a Postgraduate Masters or a Doctoral loan will be 5.4 per cent (RPI + 3 per cent). The repayment threshold for Postgraduate loans continues to be £21,000.
Mortgage Style Loans
From 1 September 2019 until 31 August 2020, the interest rate for mortgage-style loans will be 2.4 per cent. The deferment threshold for mortgage style loans will be £32,347.