For students starting university in England this coming 2023 academic year, a new undergraduate and postgraduate student loan plan type 5 is introduced.
We already have:
- Repayment plan 1 – If the course was started before 1st September 2012 (England and Wales); and also for loans in Northern Ireland
- Repayment plan 2 – If the course started between 1st September 2012 and 31st July 2023 (England and Wales)
- Postgraduate Loan – If the postgraduate Master’s course on or after 1st August 2016 or a Doctoral course on or after 1st August 2018
- Repayment plan 4 – for Scotland whether you studied an undergraduate course or a postgraduate course.
Eventually, plan type 5 student loan deduction (for England only at this stage) will commence for payroll deductions and repayments from April 2026.
Repayment plan 5 – If you start an undergraduate or postgraduate course after 1st August 2023 (England)
Repayment plan 5 is a new repayment plan, being introduced for students starting undergraduate and Advanced Learner Loan courses on or after 1st August 2023. Those with these new student loans won’t be expected to make repayments to their plan 5 student loan until April 2026 at the earliest, even if they leave their course early.
They only start making repayments if their employment income is over the repayment threshold. The repayment threshold for the 2026-27 tax year will be £25,000 a year, £2,083 a month or £480 a week in the UK.
If income falls below the repayment threshold, repayments will stop and only restart when income is over the threshold again.
They can also make additional voluntary repayments to SLC at any time.
The deduction is 9% of relevant income over the repayment threshold, which is currently £25,000 a year, £2,083 a month or £480 a week in the UK. If income changes, either rising or falling, the repayment amount will automatically change to reflect this.
Multiple student loan types
It is possible that a new employee may have had multiple different student loan plan types including postgraduate.
Only one of plan 1, 2 and 4 can operate as a deduction at one time. Where an employee indicates more than one of these plan types on the starter checklist, plan 1 takes precedence if indicated, then plan 4. Currently Plan 2 can only be operated if selected alone with no other plan type. Currently Plan 5 is not to be operated before April 2026.
Postgraduate can run in parallel or on its own.
The HMRC will issue the correct plan type to be operated on notification SL1 or PGL1.
Currently if HMRC issues an SL2 stop notice, it stops all Plan 1, 2 and 4 deductions as the instruction is presently none plan specific.