If you started your undergraduate and advanced learner loan courses on or after 1 August 2023, you will fall into the new ‘Plan 5’ payment bracket.
From April 2026, students who fit the Plan 5 criteria will begin repaying their student loan. It’s therefore important that you understand the new plan and how it will work.
How will the new Plan 5 payment structure work?
The Plan 5 payment structure will have three specific income thresholds. If your income matches one of the following thresholds, you will be required to start paying off your student loan and payments will be automatically deducted from your pay:
- £25,000 per annum
- £2,083 per month
- £480 a week.
Should your income fall below the thresholds in place, the Student Loans Company (SLC) will automatically stop taking payments.
Once you return to that threshold, the SLC will begin to take payments once again.
How will you be charged?
Under Plan 5, there will be a nine per cent charge on your income, which is collected through payroll or via Self Assessment, if you are classed as self-employed.
Should you receive a pay increase, for example, this will be reflected in the figure collected.
So, if you are in the Plan 5 bracket and earn £28,000 per annum, you can expect a deduction of £22 per month to be taken out to pay student loan costs.
If your pay were to increase to £31,000 per annum, the monthly deduction would increase to around £45 per month to reflect your salary increase.
How we can help
Whether you are an employee or an employer, you need to understand the new payment structure taking effect and our team is here to advise and help.
We can talk you through all the student loan categories, including Plan 5 and help you put measures in place to manage the changes coming into effect.
