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Will you need to start repaying your Postgraduate loan this month?

Tuesday 16 April 2019 Higher Education

Postgraduate loans – repayments via the tax system

You may need to start repaying your postgraduate loan for Doctoral and Master’s courses in England and Wales as some repayments will begin in April 2019, if you meet the relevant criteria.

When you start repaying your postgraduate loan will depend on your type of postgraduate course, when you started it and how much you are earning.

 

Course

For full-time Master’s courses, you will usually start repaying your loan from the April after you have finished your postgraduate course. This is similar to undergraduate Plan 1 and Plan 2 loans.

However, if you are on a part-time postgraduate Master’s course, which lasts three to four years and started in the 2016/17 academic year, your repayments will start from April 2019 - even though you are still studying.

If you have a postgraduate Doctoral loan then repayments may start from the earliest of:

  • the April following the end of your course (as in the case of Plan 1 or Plan 2 loans); or
  • the April four years after the start of your course (so if you started your course in October 2016 this would be April 2021).

 

Earnings

You will only start repaying your postgraduate loan at a rate of six per cent on earnings above the repayment threshold:

  • £21,000 a year for earnings from employment or self-employment; and
  • on other unearned income of £2,000 or more a year if you are required to fill in a tax return under Self Assessment (for example, rental income and savings). 

 

How repayments of your loan are made

If you are living in the UK, your repayments will be collected through the tax system by HM Revenue & Customs (HMRC) and then paid on your behalf to the Student Loans Company (SLC). The Tax Guide for Students website explains with examples of how repayments are calculated and collected through the tax system.

It is important that both HMRC and the SLC have an up-to-date address for you and that you give accurate details to any employer about what types of student loans you have.

If you go abroad for more than three months, you must inform the SLC as the repayment thresholds may differ to the UK and you will need to arrange direct repayments with the SLC and not HMRC.

If you are also repaying a Plan 1 or Plan 2 undergraduate loan, then you will repay your postgraduate loan concurrently with your other loans. It may be complicated to check the repayments are correct, because different repayment thresholds and rates of repayments apply, and these may not be detailed on your payslip. The Tax Guide for Students website has examples which illustrate how the different repayments are calculated.

 

Information provided by the Low Incomes Tax Reform Group, an initiative of the Chartered Institute of Taxation.