After you graduate, your tuition fee loan and your loan for living costs will be combined together into one sum. You don’t have to start paying anything back until the April after you have finished your course and only when you have started earning over £25,725 per year.
The amount you pay back is 9% of your income above £25,725.
The following table shows a range of salaries and typical repayment rates:
|Salary (before tax)||Monthly salary||Approximate monthly repayment|
If your salary drops below £25,725 at any point, you cease to repay your loan until you earn above this amount again.
Repayments will usually be made automatically through the tax system. Any outstanding amount will be written off after 30 years.
Interest will accrue on the amount you have borrowed from the date you receive their first loan instalment, or when the payment is made to your college or university on your behalf, until the outstanding amount (including any interest accrued) has been repaid in full.
Interest rates are based on the Retail Price Index (RPI). While studying, you will accrue inflation plus 3% on the outstanding balance; this level of interest continues until the April after graduation. At this point, it changes to a variable rate of interest depending on earnings outlined in the table below.
|Annual salary||Interest paid|
|Less than £25,725||RPI|
|£25,725–£46,305||RPI + up to 3% (depending on earnings)|
|More than £46,305||RPI + 3%|
Loan repayments and your credit rating
The Council of Mortgage Lenders has advised the government that a student loan is very unlikely to impact materially on an individual’s ability to get a mortgage, although the amount of mortgage available to you may depend on your net income.
Whether student loan repayments affect your ability to take out other loans would be a decision for the loan provider, but student loan information will not be shared with credit reference agencies by Student Finance England.