Complete guide to how maternity leave affects student loan repayments including statutory and enhanced pay scenarios
Most people on maternity leave pay nothing toward student loans because statutory maternity pay falls well below repayment thresholds. Standard statutory maternity pay of £184.03 weekly (£797 monthly) sits far below the Plan 2 threshold of £28,470 annually (£2,373 monthly), triggering zero deductions.
However, employees receiving enhanced maternity packages from generous employers may continue making payments if their maternity pay exceeds thresholds. Those receiving full or near-full salary during early maternity leave continue loan deductions through PAYE until pay drops below threshold levels. Self-employed individuals typically make zero payments during maternity periods due to reduced or zero income.
Student loan repayments automatically adjust to current income through PAYE system, requiring no paperwork or notifications when income drops during maternity leave. Your employer's payroll automatically stops deductions when maternity pay falls below threshold. This income-contingent flexibility means maternity leave creates natural payment pause for most borrowers, resuming automatically upon return to full salary. No "maternity exemption" application exists because system already accommodates reduced income automatically through normal threshold calculations.
Understanding PAYE mechanics during maternity leave explains why most people experience automatic payment cessation without intervention.
PAYE calculates student loan deductions monthly based on gross monthly income versus monthly threshold. When maternity pay drops income below threshold, deductions stop automatically:
Current Monthly Thresholds (2025/26)
Plan 1: £1,914 monthly (£22,962 annually)
Plan 2: £2,373 monthly (£28,470 annually)
Plan 4: £2,730 monthly (£32,760 annually)
Plan 5: £2,173 monthly (£26,075 annually)
Postgraduate: £1,825 monthly (£21,903 annually)
Statutory Maternity Pay Standard Rate
Weekly rate: £184.03 (or 90% of average weekly earnings if lower)
Monthly equivalent: Approximately £797
Annual equivalent: £9,569
Result: Falls well below all plan thresholds, triggering ZERO student loan deductions
Standard statutory maternity package follows structured payment pattern affecting loan deductions differently across leave period:
Weeks 1-6: Enhanced Rate Period
Pay: 90% of average weekly earnings (uncapped)
Student loan impact: If previous salary exceeded threshold, continue paying student loans at reduced rate reflecting 90% income. Employee earning £35,000 normally paying £87 monthly now pays approximately £78 monthly during this period.
Weeks 7-39: Standard Rate Period
Pay: £184.03 weekly (approximately £797 monthly)
Student loan impact: Income drops far below all thresholds. PAYE automatically stops student loan deductions completely. Zero payments made during this extended period regardless of previous salary level or loan plan.
Weeks 40-52: Unpaid Leave (Optional)
Pay: £0
Student loan impact: Zero income means zero student loan obligation. No deductions possible or required. Many employees take additional unpaid leave during this period for extended maternity, all with zero student loan payments.
Return to Work
Upon resuming full salary, PAYE automatically reinstates student loan deductions at normal rate based on salary. No gap year penalty or catch-up payments required for zero-payment maternity period. Loans simply accumulate interest during payment pause, with repayments resuming when income recovers.
The PAYE system handles maternity leave student loan adjustments completely automatically. You do not need to inform Student Loans Company of maternity leave, apply for payment pause, or complete any forms. Your employer's payroll simply calculates monthly student loan deductions based on current income, which naturally drops below threshold during statutory maternity pay periods triggering automatic cessation. Upon return to full salary, deductions resume automatically without requiring reactivation or notification. This seamless automation represents major advantage of income-contingent repayment versus fixed-payment commercial loans requiring hardship applications and creditor negotiations for payment relief.
Detailed understanding of statutory maternity pay calculations reveals exactly when and why student loan deductions cease for most employees.
Employee Profile
Pre-maternity salary: £32,000 annually (£2,667 monthly)
Student loan: Plan 2
Normal monthly student loan payment: £26 (9% on £294 above £2,373 threshold)
Maternity leave start: January 2026
Weeks 1-6 (Enhanced Rate: 90% of Earnings)
Monthly income: £2,400 (90% of £2,667)
Amount above Plan 2 threshold: £2,400 - £2,373 = £27
Student loan deduction: £2.43 (9% of £27)
Minimal payment continues during enhanced rate period
Weeks 7-39 (Standard Rate: £184.03 Weekly)
Monthly income: £797 (£184.03 × 52 ÷ 12)
Plan 2 threshold: £2,373
Amount above threshold: £0 (income far below threshold)
Student loan deduction: £0
Zero payments for approximately 33 weeks (7.5 months)
Return to Work (Full Salary Resumed)
Monthly income: £2,667 (full salary)
Amount above threshold: £294
Student loan deduction: £26 (9% of £294)
Normal payments resume automatically, no catch-up required
Total Maternity Leave Impact
Normal annual payments: £312 (£26 × 12 months)
Payments during maternity year: Approximately £78 (weeks 1-6 only + return to work months)
Savings from maternity pause: Approximately £234
Maternity leave provides natural nine-month payment holiday for typical statutory maternity scenario
While making zero payments during maternity leave, loan balances continue accruing interest. For borrower with £45,000 balance at 4.8% Plan 2 rate, nine months of zero payments means approximately £1,620 additional interest accumulation.
Why this doesn't matter for most: Majority of Plan 2 borrowers reach thirty-year write-off without fully repaying, meaning interest accumulated during maternity ultimately gets written off tax-free alongside principal. The pause benefits you through retained income while balance growth creates zero practical cost if heading toward write-off. Only high earners certain to fully repay experience genuine cost from maternity interest accumulation, and even then it remains modest relative to overall repayment obligations.
Employees fortunate to receive enhanced maternity packages from generous employers face different student loan implications as higher maternity pay may exceed thresholds.
Enhanced packages vary widely but commonly follow patterns like:
Generous Public Sector (NHS, Civil Service)
Typical structure: 8 weeks full pay, 18 weeks half pay plus SMP, 13 weeks SMP only
Student loan impact: Continue paying full amount during 8-week full pay period. Reduced payments during half pay period if combined income exceeds threshold. Zero payments during SMP-only period.
Professional Services Firms
Typical structure: 6 months full pay, 3 months statutory only
Student loan impact: Continue normal payments throughout 6-month full pay period. Zero payments once dropping to statutory. Substantial payment reduction versus statutory-only scenario.
Premium Corporate (Tech, Finance)
Typical structure: 12 months full pay
Student loan impact: Zero change to student loan payments throughout entire maternity leave. Continue paying as if working normally, providing zero payment relief but also zero balance growth from missed payments.
Employee Profile
Salary: £55,000 (£4,583 monthly)
Student loan: Plan 2
Normal monthly payment: £199 (9% on £2,210 above threshold)
Enhanced package: 6 months full pay, 3 months statutory, 3 months unpaid
Payment Timeline
Months 1-6 (full pay): £199 monthly × 6 = £1,194 paid
Months 7-9 (statutory): £0 monthly × 3 = £0 paid
Months 10-12 (unpaid): £0 monthly × 3 = £0 paid
Total year payments: £1,194 versus £2,388 normal year (50% reduction)
From student loan perspective, enhanced maternity packages create mixed implications. On one hand, higher maternity pay means continued loan deductions reducing payment relief versus statutory packages. On other hand, enhanced packages provide far superior overall financial security through maintained income enabling proper maternity financial planning. The student loan savings from dropping to statutory pay (perhaps £800-£1,200 annually for moderate earner) pale compared to income security benefits of enhanced packages providing £15,000-£30,000 additional income during maternity. Graduates should prioritize employer enhanced packages for overall financial stability rather than optimizing for minimal student loan payment relief.
Self-employed individuals face different maternity payment dynamics as they rely on Self Assessment rather than PAYE for student loan calculations.
Self-employed borrowers calculate and pay student loans through annual Self Assessment tax returns based on previous year's profits:
Timing Creates Lag Effect
Example timeline: Self-employed person takes maternity leave April 2025 to March 2026. During this period, earnings drop to perhaps £5,000 from reduced work. However, January 2026 Self Assessment calculates student loan based on 2024/25 tax year when earnings were £35,000 full-time, triggering normal payments despite current maternity status.
Not until January 2027 Self Assessment (calculating 2025/26 tax year) do reduced maternity earnings flow through to student loan calculations, by which point person may have resumed normal work, creating delayed but substantial single-year payment reduction.
Maternity Allowance for Self-Employed
Self-employed individuals typically receive Maternity Allowance (£184.03 weekly, same as SMP) rather than statutory maternity pay, lasting up to 39 weeks.
Student loan treatment: Maternity Allowance is benefit income not included in Self Assessment profit calculations. Only actual business earnings count toward student loan thresholds.
If ceasing work completely during maternity claiming only Maternity Allowance, business profits drop to zero triggering zero student loan obligation for that tax year when eventually calculated through Self Assessment.
Self-employed people planning maternity should understand that student loan relief comes delayed versus PAYE employees who experience immediate payment cessation when income drops. Consider building cash reserves to cover student loan payments calculated on pre-maternity earnings while actually on reduced maternity income, or arrange payment plans with HMRC if January tax bill including student loan creates cashflow challenges during maternity period. The lag effect eventually corrects creating favorable student loan year, but immediate period requires careful financial management bridging timing mismatch between income drop and payment calculation.
Strategic financial planning around maternity leave and student loans helps optimize outcomes while avoiding common pitfalls.
Some borrowers consider making voluntary loan overpayments before maternity leave, thinking reduced income during leave makes this "ideal time" to pay down debt. This reasoning fails for most borrowers heading toward write-off.
Better approach: Preserve cash for maternity period expenses rather than voluntary loan payments. Maternity naturally provides payment pause through reduced income - overpaying beforehand wastes pre-maternity income that could build emergency funds, cover maternity costs, or invest for child's future. Only high earners certain to fully repay should consider pre-maternity overpayments, and even then questionable given alternative uses for funds. For comprehensive repayment guidance, see our repayment strategies guide.
Returning to full salary after extended period with zero or minimal deductions sometimes creates budget shock as take-home pay drops from maternity-adjusted amount back to normal post-deduction level. A person earning £35,000 receives approximately £2,400 monthly net during maternity statutory period, then drops to approximately £2,220 monthly upon return as £87 student loan deduction resumes alongside other tax adjustments. Plan household budgets acknowledging this take-home reduction rather than being surprised by sudden post-maternity income drop when student loan and full tax deductions restart.
Some parents extend maternity leave beyond paid period or transition to reduced hours upon return. From student loan perspective, these decisions create minimal complications as income-contingent structure automatically adjusts.
Part-time return example: Returning three days weekly at £35,000 full-time equivalent creates £21,000 part-time salary, dropping below Plan 2 threshold and triggering continued zero payments. This extends maternity payment holiday indefinitely while working part-time, providing financial breathing room during early childcare years. When eventually returning full-time, payments resume automatically without penalty or catch-up requirements.
Parents having multiple children relatively close together may experience years of minimal student loan payments through serial maternity leaves. A person having children two years apart might make zero or minimal payments for five to six years total across two maternity leaves plus any part-time work periods between.
Long-term impact: For moderate earners heading toward write-off, these extended payment pauses reduce lifetime repayment totals substantially while balance growth during pauses ultimately gets written off anyway. The income-contingent structure accommodates family planning decisions without penalizing parents through forced payments during low-income maternity periods, representing crucial fairness feature distinguishing student loans from commercial debt demanding payments regardless of life circumstances.
Standard statutory maternity pay of £797 monthly falls far below all student loan thresholds, triggering automatic zero deductions through PAYE without requiring applications or notifications. Enhanced maternity packages providing full or partial salary may continue loan deductions during paid periods, but most employees still experience substantial payment reduction versus normal working arrangements. Self-employed individuals face timing complications as Self Assessment calculates payments based on previous year's earnings, creating lag between income drop and payment relief. The income-contingent repayment structure automatically accommodates maternity leave through threshold-based calculations, resuming payments seamlessly upon return to full salary without penalties or catch-up requirements. Balance growth from zero-payment maternity periods proves financially irrelevant for moderate earners heading toward write-off, while high earners experience modest additional interest representing minor cost relative to overall repayment obligations. Strategic planning involves preserving cash for maternity expenses rather than voluntary overpayments, anticipating take-home pay reduction when student loan deductions resume post-maternity, and understanding how extended leave or part-time return naturally extends payment pauses through continued below-threshold income.
For personalized payment calculations, use our student loan calculator. For comprehensive guidance, see our complete guide to UK student loans.
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.