Student Loans on a £25,000 Salary

If you're earning £25,000 per year, your student loan repayments will vary significantly depending on which plan you're on. This guide breaks down exactly what you'll pay at this salary level across all UK student loan plans.

£25,000 is a particularly interesting salary to analyze because it sits at the exact repayment threshold for Plan 5 loans. This means if you're on Plan 5 and earning £25,000, you're just at the point where repayments would begin.

Plan 1 Loans

On a Plan 1 loan, with its lower threshold of £22,015, you'll be making repayments of £22.39 per month. This is calculated as 9% of the amount you earn above the threshold:

• Income: £25,000
• Amount above threshold: £25,000 - £22,015 = £2,985
• Yearly repayment: 9% of £2,985 = £268.65
• Monthly repayment: £268.65 ÷ 12 = £22.39

Plan 2 and Plan 4 Loans

If you're on Plan 2 or Plan 4, you won't make any repayments at a £25,000 salary because the repayment thresholds (£27,295 and £27,660 respectively) are higher than your income. You only start repaying once you earn above these thresholds.

Plan 5 Loans

At exactly £25,000, you're at the Plan 5 repayment threshold, meaning you won't make any repayments. However, it's important to note that if your salary increases slightly to £25,001, you would start making small repayments. The Plan 5 threshold puts you at the tipping point where repayments could begin with any minimal salary increase.

Postgraduate Loans

With a Postgraduate Loan, you'd repay £20 per month, as the threshold is £21,000. The calculation works as:

• Income: £25,000
• Amount above threshold: £25,000 - £21,000 = £4,000
• Yearly repayment: 6% of £4,000 = £240
• Monthly repayment: £240 ÷ 12 = £20

Combined Plans

If you have both an undergraduate and postgraduate loan, at £25,000 you would only be making repayments toward your postgraduate loan (£20 monthly), as you're below the repayment threshold for Plan 2 and Plan 5 undergraduate loans.

Here's how your monthly take-home pay would be affected by student loan repayments at £25,000 per year (after tax and National Insurance, but before other deductions):

As you can see, Plan 1 loans have the most significant impact on take-home pay at this salary level, reducing your monthly income by £22. Postgraduate loans reduce it by £20, while Plan 2, 4, and 5 have no impact as you're below their repayment thresholds.

If your salary increases even slightly above £25,000, your repayment situation could change, particularly for Plan 5 loans:

At £26,000

• Plan 1: £29.89 monthly (up from £22.39)
• Plan 2: Still £0 (below threshold)
• Plan 4: Still £0 (below threshold)
• Plan 5: £7.50 monthly (9% of £1,000)
• Postgraduate Loan: £25 monthly (up from £20)

The key takeaway is that a £25,000 salary puts you right at the Plan 5 threshold. Any increase in salary will trigger Plan 5 repayments, while you would need to earn over £27,295 to start repaying a Plan 2 loan.