How maternity and paternity leave affects student loan repayments, interest accumulation, and long-term financial planning
Planning for a baby while managing student loan debt requires understanding how maternity and paternity leave affects your repayments. During pregnancy leave, most parents see their income drop to statutory pay levels (around £184.03 per week or £18,509 annually), which falls well below the £25,000 Plan 5 repayment threshold. This means zero student loan deductions during most of your leave—but interest continues accruing on your outstanding balance.
For a typical 12-month maternity leave, you will make no student loan repayments for approximately 9 months (after initial enhanced maternity pay period), while £2,500-£3,500 in interest accumulates on your loan balance. This effectively adds 1-3 years to your repayment timeline if you are on track to repay fully, or increases your total write-off balance if you are heading for 40-year cancellation.
However, the impact varies dramatically based on your career trajectory and repayment path. For moderate earners heading toward write-off, pregnancy leave actually reduces total lifetime repayment. For high earners on track to clear their debt, it extends repayment duration and increases total cost. Understanding these dynamics helps you prepare financially and make informed decisions about leave duration and return-to-work arrangements.
Student loan repayments are calculated on your gross income through PAYE. When your income drops during maternity or paternity leave, your repayments automatically adjust—or stop entirely if you fall below the £25,000 threshold.
Plan 5 student loans require repayment of 9% on income above £25,000 annually (£2,083 per month). During maternity leave:
Full salary period (before leave): If earning £40,000, you pay £1,350 annually (£112.50 monthly)
Enhanced maternity pay (weeks 1-6): 90% of average weekly earnings = typically above threshold for higher earners, some repayments continue
Statutory maternity pay (weeks 7-39): £184.03 per week = £9,569 annually, well below threshold = £0 repayment
Unpaid leave (weeks 40-52): £0 income = £0 repayment
During the first 6 weeks of maternity leave, you receive 90% of your average weekly earnings. For higher earners, this may still trigger loan repayments:
| Pre-Leave Salary | 90% Pay (Weeks 1-6) | Monthly Repayment | Total 6 Weeks |
|---|---|---|---|
| £30,000 | £27,000 | £15.00 | ~£22.50 |
| £40,000 | £36,000 | £82.50 | ~£123.75 |
| £50,000 | £45,000 | £150.00 | ~£225.00 |
| £60,000 | £54,000 | £217.50 | ~£326.25 |
After week 6, your income drops to statutory maternity pay (£184.03 per week = £9,569 annually), which is well below the £25,000 threshold. Student loan repayments stop completely for the remaining 33 weeks of statutory pay plus any unpaid leave.
You do not need to notify Student Finance England about maternity leave—your repayments adjust automatically through PAYE:
Understanding the structure of statutory pay helps you calculate exactly when student loan repayments stop and how much interest will accumulate during your leave.
Weeks 1-6: Enhanced Rate
Weeks 7-39: Standard Rate
Weeks 40-52: Unpaid Leave (Optional)
Parents can share up to 50 weeks of leave and 37 weeks of pay:
Many employers offer enhanced maternity/paternity pay above statutory minimums:
Let us model exactly how different maternity leave scenarios affect student loan repayments based on your pre-leave salary and career trajectory.
Profile: Teacher earning £38,000, taking full 52 weeks leave (39 weeks paid, 13 weeks unpaid)
Before Pregnancy:
During Maternity Leave:
Financial Impact:
Profile: Software engineer earning £65,000, taking 39 weeks leave (returning after statutory pay ends)
Before Pregnancy:
During Maternity Leave (39 weeks):
Financial Impact:
Profile: Accountant earning £48,000, taking 26 weeks leave (6 months)
Before Pregnancy:
During Leave (26 weeks) + Return:
Critical Decision Point:
While you make reduced or zero loan repayments during pregnancy leave, interest continues accruing on your outstanding balance at the full rate. Understanding this accumulation helps you prepare for the balance increase you will see when you return to work.
Your student loan interest rate depends on your income level, but during maternity leave at statutory pay, you will be charged the lowest rate:
Starting Balance: £40,000 - 12 Month Leave
Starting Balance: £55,000 - 9 Month Leave
Starting Balance: £70,000 - 6 Month Leave
If you are heading for 40-year write-off, interest accumulation during maternity leave is actually beneficial:
Many parents return to work part-time after maternity leave. This significantly affects student loan repayments and long-term loan trajectory.
Part-time work proportionally reduces your salary and therefore your student loan repayments:
| Work Pattern | FT Salary £45k | PT Salary | Annual Repayment | Monthly Deduction |
|---|---|---|---|---|
| 5 days (100%) | £45,000 | £45,000 | £1,800 | £150.00 |
| 4 days (80%) | £45,000 | £36,000 | £990 | £82.50 |
| 3 days (60%) | £45,000 | £27,000 | £180 | £15.00 |
| 2.5 days (50%) | £45,000 | £22,500 | £0 | £0 |
Key insight: Working 3 days instead of 5 days reduces loan repayments by 90% (from £1,800 to £180 annually), not just 40% like your salary reduction. This is because you drop closer to the £25,000 threshold where the 9% rate applies to less income.
Scenario A: Return Full-Time After 1 Year
Scenario B: Return 3 Days/Week for 5 Years
Scenario C: Return 4 Days/Week Permanently
While student loans are one factor, consider the broader career implications:
Balanced approach: Make decisions based primarily on childcare needs and career goals. Student loan impact should inform but not dominate these major life choices.
Planning multiple children creates cumulative effects on student loan repayment timelines and total costs. Understanding these compound impacts helps with long-term family financial planning.
Two Children, 18 Months Apart:
Three Children, 3 Years Apart Each:
Earlier children (age 25-30):
Later children (age 32-38):
For parents heading toward 40-year write-off, multiple maternity leaves are financially advantageous:
Preparing financially for pregnancy and maternity leave while managing student debt requires advance planning. Here is a comprehensive timeline and checklist.
Financial Assessment
Savings Strategy
Administrative Tasks
Financial Adjustments
Income Monitoring
Career Decisions
Financial Planning
Most parents see their loan balance grow by £2,000-£4,000 during maternity leave as interest accumulates while repayments stop. For those heading toward write-off, this is actually beneficial—you pay less total. For those on track to repay fully, it extends your timeline by 1-3 years but does not change the fundamental outcome.
UK Education Policy Specialist
With over 15 years of experience in UK education policy and student finance, Dr. Sharma founded Student Loan Calculator UK to help students navigate the complex world of student loans.