Student Loan interest rates rose on the 1st September 2020, however repayment thresholds are also set to rise from April 2021. This means that the minimum annual salary at which graduates will start to repay their loans will be higher.
There are three different loan deductions which can be paid through the payroll and these are paid at different rates.
Know which Student Loan Plan
- Plan 1 Student Loan Plan are all loans that started between 1998 and 2011 plus Scottish and Northern Irish students’ loans since 2012.
- Plan 2 Student Loan Plan are all loans for English and Welsh students who started university in or after 2012
- Post Graduate Loans are paid back on top of an employee`s Student Loan where applicable.
The repayment threshold will rise for most student loans from 6 April 2021 – which means your employee can earn more before they start to pay their loan back:
- Plan 2 loans: The repayment threshold will increase from £26,575/year to £27,295/year.
- Plan 1 loans: The repayment threshold will increase from £19,390/yr to £19,895/yr.
- Postgraduate loans: The threshold will remain at £21,000/yr.
For more information or if you have any questions regarding student loan repayments please do not hesitate to Dynamic Payroll today.