How are Student Loans dealt with by payroll?
What's new
Student loan plan type and postgraduate loan thresholds and rates from 6 April 2024 are as follows:
- plan 1: £24,990
- plan 2: £27,295
- plan 4: £31,395
- postgraduate loan: £21,000
Deductions for:
- plan type 1, 2 and 4 remain at 9% for any earnings above the respective thresholds
- postgraduate loan remains at 6% for any earnings above the respective threshold
Guidance on student loans, plans and loan types will be updated on 6 April 2024 with the new thresholds.
For more information on making loan deductions in different circumstances, read the student loan and postgraduate loan repayment guidance for employers on GOV.UK.
Changes in 2023/24
The shake-up of the student finance system will begin in September 2023 and include:
- A freeze on university course fees: they remain at £9,250 for a further two years.
- Earning levels at which new borrowers start to repay their loans will be set at £25,000 until 2026-27 (currently £27,295), for those starting courses from September 2023.
- In June 2022, Higher Education Minister Michelle Donelan announced that the rate on loan repayments would be capped at 7.5%. So now the interest rate is the Retail Price Index (RPI) plus 3% and capped at 7.5%.
- The student loan repayment term will also be extended from 30 to 40 years for new borrowers from September 2023.
HMRC have created a factsheet to help agents in the preparation of Self Assessment tax returns where Student Loans need to be considered: See http://www.hmrc.gov.uk/leaflets/csla1.pdf
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