Your complete guide to UK student loan terminology, definitions, and key concepts
The minimum annual income level above which student loan repayments begin. This threshold varies by loan plan and is updated annually in line with inflation or government policy.
The yearly interest rate applied to your student loan balance. For UK student loans, this is typically linked to RPI inflation plus a percentage margin that varies by plan and income.
The total amount you owe on your student loan, including the original borrowed amount plus accumulated interest, minus any repayments made.
An additional payment made through Self Assessment if your PAYE deductions during the tax year were insufficient to cover your full student loan repayment obligation.
A one-time payment from your employer in addition to regular salary. Student loan repayments are calculated on your total income including bonuses, which may push you into a higher repayment bracket temporarily.
A tax deduction scheme for contractors in the construction industry. Student loan repayments are deducted at source alongside CIS deductions.
When you have multiple student loans (e.g., undergraduate Plan 2 and Postgraduate Loan), you make separate repayments on each based on their respective thresholds and rates.
Interest charged on both your original loan amount and on previously accumulated interest. UK student loans use compound interest calculated daily.
A temporary pause in student loan repayments when your income falls below the repayment threshold or you're studying, unemployed, or on parental leave. Interest continues to accrue during deferment.
A payment method used for voluntary overpayments to the Student Loans Company. Standard repayments through employment are automatically deducted via PAYE, not Direct Debit.
Income from shareholdings that counts toward your total income for student loan repayment calculations when filing Self Assessment, but is not subject to PAYE deductions.
Making voluntary payments above your automatic deductions to pay off your student loan faster. Consider whether this is financially beneficial given write-off dates and interest rates.
Income from employment (salary, wages, bonuses) that is subject to PAYE deductions, including automatic student loan repayments.
Repayments begin in the April after you finish your course or leave university, provided your income exceeds the threshold for your plan type.
Students studying full-time do not make student loan repayments during their studies, regardless of any part-time work income. Interest accrues from the first payment.
The period between finishing your studies and when repayments begin. For UK student loans, this is until the April following graduation.
Your total income before any deductions (tax, National Insurance, pension contributions). Student loan repayments are calculated on gross income minus certain allowable deductions.
The year you complete your course, which determines when your write-off period begins counting and affects which repayment plan applies to you.
For Plan 2 loans, interest rates increase progressively as income rises from the threshold (£27,295) to £49,130. Above £49,130, maximum interest of RPI + 3% applies.
The UK tax authority responsible for collecting student loan repayments through PAYE and Self Assessment, then forwarding them to the Student Loans Company.
The UK student loan system where repayments are based on your income level rather than your loan balance. You only repay when earning above the threshold, and amounts adjust with income changes.
The rate at which prices increase over time. Student loan interest rates and repayment thresholds are typically linked to inflation measures (RPI or CPI).
Some student loan plans (Plan 1, Plan 4) charge interest equal to or close to inflation, effectively making the real interest rate zero or minimal.
The percentage charged on your outstanding loan balance. Rates vary by plan: Plan 1/4 use RPI or BOE base rate +1% (whichever is lower), Plan 2/5 use RPI + 0-3% depending on income, Postgraduate Loan uses RPI + 3%.
Tax legislation affecting contractors working through intermediaries (personal service companies). If inside IR35, you're treated as an employee for tax purposes, including student loan deductions.
The collective term for all student loans held and managed by the Student Loans Company or the government.
A one-time larger payment made to reduce or pay off your student loan balance. Can be made at any time without penalty.
Money borrowed to cover living costs while studying (accommodation, food, bills, course materials). The amount depends on household income, location, and whether living at home.
The combined percentage of additional income paid in tax, National Insurance, and student loan repayments. Can reach 42-51% for higher earners with student loans.
Periods of reduced income due to parental leave. Statutory maternity pay (approximately £184/week) is usually below the repayment threshold, automatically pausing repayments.
The monthly equivalent of the annual repayment threshold, used by employers to calculate PAYE deductions. For Plan 2 (2025/26): £2,274 per month.
When working multiple jobs simultaneously, each employer deducts student loan repayments separately based on your earnings with them, potentially causing overpayment if combined income is miscalculated.
A tax on earnings separate from income tax. Like student loan repayments, NI is deducted through PAYE and has its own threshold and rates.
When your repayments don't cover the interest accruing on your loan, causing your balance to grow despite making payments. Common for lower earners on Plan 2.
If you move abroad, you must inform SLC and continue making repayments based on equivalent local thresholds. Failure to do so can result in penalties and interest charges.
Either: (1) Voluntary extra payments beyond automatic deductions to reduce your loan faster, or (2) Accidentally paying too much, which can be reclaimed from SLC.
A document from your employer when leaving a job, showing earnings and deductions to date (including student loan repayments). Given to your new employer to ensure correct tax/loan codes.
Annual summary from your employer showing total earnings and deductions (tax, NI, student loans) for the complete tax year. Essential for checking correct loan deductions.
Part-time students must make loan repayments while studying if earning above the threshold, unlike full-time students who are exempt during study.
The system where employers automatically deduct income tax, National Insurance, and student loan repayments from your salary before you receive it.
Income used to calculate pension contributions. Student loan repayments are calculated on salary after pension contributions (if salary sacrifice), reducing repayment amounts.
Student loan plan for students who started courses before September 2012 in England/Wales, or Scottish students. Threshold: £24,990 (2025/26), 9% repayment rate, RPI or BOE+1% interest (lower), 25-year write-off from first April after graduation.
Most common plan for English/Welsh undergraduates who started 2012-2023. Threshold: £27,295 (2025/26), 9% repayment rate, RPI + 0-3% interest (income-linked), 30-40 year write-off depending on when you started.
For Scottish students. Threshold: £31,395 (2025/26), 9% repayment rate, lower interest rates than Plan 2, 30-year write-off.
Newest plan for English/Welsh students starting from August 2023 onwards. Threshold: £25,000, 9% repayment rate, RPI interest rate (no income-linked increase), 40-year write-off.
Separate loan for Master's degrees (up to £12,167) or Doctorates (up to £28,673). Threshold: £21,000, 6% repayment rate, RPI + 3% interest, 30-year write-off. Repaid simultaneously with undergraduate loans.
The process of checking your annual student loan deductions against what you actually owe, typically done through Self Assessment or by contacting HMRC/SLC.
Money returned if you've overpaid student loans, either within the tax year (PAYE) or after annual reconciliation. Contact SLC to request refunds.
Income from property rentals that must be declared via Self Assessment and counts toward total income for student loan calculations.
Informal term for periods when you don't make repayments because income is below threshold. No action needed - happens automatically.
The percentage of income above the threshold that goes toward student loan repayments. Typically 9% for undergraduate loans, 6% for Postgraduate Loans.
The income level below which you make no student loan repayments. Varies by plan type and is usually updated annually.
A measure of inflation used as the base for most UK student loan interest rates. RPI tracks the change in prices of goods and services over time.
Arrangement where you give up part of your salary in exchange for benefits (typically pension contributions). Reduces student loan repayments as they're calculated on post-sacrifice income.
Annual tax return required if you're self-employed, have income from multiple sources, or earn over £100,000. Student loan repayments on non-PAYE income calculated through this process.
Income from self-employment or business profits. Student loan repayments on this income are calculated annually through Self Assessment, not deducted monthly via PAYE.
Additional income alongside main employment (freelancing, gig work, etc.). Must be declared via Self Assessment if over £1,000, and counts toward total income for student loan calculations.
Government-owned organization that administers student loans in the UK, processing applications, disbursing funds, and managing repayments.
Government-mandated minimum maternity pay (currently £184.03/week). Usually below repayment thresholds, automatically pausing student loan deductions.
The service that processes student loan applications in each UK nation (Student Finance England, Wales, Scotland, Northern Ireland).
Code used by employers to calculate tax deductions. Student loan plan indicators (1-5) appear after the main tax code (e.g., 1257L SL2 means Plan 2).
Runs from 6th April to 5th April the following year. Student loan thresholds and interest rates are updated annually aligned with the tax year.
When repayment thresholds remain unchanged despite inflation, effectively increasing real repayment amounts. Recent freezes ended in 2025/26 with thresholds resuming inflation-linked rises.
Money borrowed to cover university tuition fees, paid directly to your institution. Maximum £9,250/year for most English undergraduate degrees.
Intermediary employment company used by contractors. Deducts PAYE tax and student loans like a standard employer, but charges admin fees.
Loans taken for first degrees (Bachelor's). Includes both tuition fee and maintenance loans, repaid under Plan 1, 2, 4, or 5 depending on circumstances.
Income not from employment (dividends, rental income, savings interest). Not subject to PAYE deductions but counted in total income for Self Assessment loan calculations.
Income that changes month-to-month (commission, bonuses, hourly wages). Student loan deductions through PAYE adjust automatically, but may require Self Assessment reconciliation.
Additional payments you choose to make above automatic deductions. Can be made anytime without penalty, but consider whether financially beneficial given write-off dates.
Payment for work, typically hourly or weekly. Student loan repayments are deducted through PAYE on total wages above the threshold.
The date when any remaining student loan balance is cancelled. Timing varies by plan: Plan 1 (25 years), Plan 2 (30-40 years depending on start date), Plan 4 (30 years), Plan 5 (40 years), Postgraduate (30 years).
The number of years after which your loan is written off if not fully repaid. The period length depends on your loan plan type and when you started studying.