When are student loans written off? Everything you need to know before September

Student loans often run into the tens of thousands of pounds

A student loan is designed to cover university fees, with the majority of courses starting in September every year.

But going to university isn’t cheap. The latest data provided by the Government shows the average student loan balance is now £48,470 - however, for some people who study multiple or lengthy courses, the debt can be even higher. New data obtained by the BBC shows almost 1.8 million people now owe at least £50,000.

More than 61,000 people owe at least £100,000, and another 50 people owe more than £200,000. How much you pay back each month depends on when you started your university course and how much you're currently earning - and the debt is wiped after a certain number of years. Here is everything you need to know.

Which student loan plan are you on?

First of all, you need to know what type of student loan plan you should be on.

• Plan 1: If you started your course before September 1, 2012 (England and Wales) or after September 1, 1998 (Northern Ireland)
• Plan 2: If you started your course between September 1, 2012 and July 31, 2023 (England) or after September 1, 2012 (Wales)
• Plan 4: If you started your course after September 1, 1998 (Scotland)
• Plan 5: If you started your course after August 1, 2023 (England)

If you’re a postgraduate student from Northern Ireland, you will be on Plan 1, or for postgraduate courses in Scotland, you're on Plan 4.

When do you start repaying?

As mentioned before, you only start to repay your student loan when you earn over a certain threshold. This means if you earn below these thresholds, you don't have to make repayments. The earliest you’ll start repaying is the April after you leave your course.

• Plan 1: You start to repay your student loan when your income is over £24,990 a year
• Plan 2: You start to repay your student loan when your income is over £27,295 a year
• Plan 4: You start to repay your student loan when your income is over £31,395 a year
• Plan 5: You start to repay your student loan when your income is over £25,000 a year
• Postgraduate: You start to repay your student loan when your income is over £21,000 a year (England and Wales)

How much do you have to repay?

You repay 9% of your income over the threshold if you’re on Plan 1, 2, 4 or 5, or 6% of your income over the threshold if you took out a postgraduate loan. You're also charged interest on your student loan. You're charged 6.25% if you're on a Plan 1 or Plan 4 loan, or 7.9% if you have a Plan 2, Plan 5 or postgraduate loan.

If you’re self-employed, HMRC will work out how much you repay each year from your tax return.

When does your student loan get written off?

Again, it all depends on the type of plan you're on.

• Plan 1: It will be written off after 25 years if you were paid the first loan on or after September 1, 2006, or when you reach the age of 65 if you were paid the first loan before September 1, 2006.
• Plan 2: It will be written off 30 years after the April you were first due to repay.
• Plan 4: It will be written off 30 years after the April you were first due to repay if you were paid the first loan on or after August 1, 2007, or when you’re 65, or 30 years after the April you were first due to repay, if you were paid the first loan before August 1, 2007.
• Plan 5: It will be written off 40 years after the April you were first due to repay.
• Postgraduate: It will be written off 30 years after the April you were first due to repay (England and Wales)

Should you worry about your student loan?

We spoke to Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, who said students should view their loan repayments as more of a "graduate tax" on earnings. She said: "Like income tax, the more you earn the more you pay so it is the highest earners that will pay the most. The sting in the tail for those who started their studies in England from September 2023 (who are on Plan 5) is that they have a longer term of 40 years to pay off their loans, a decade longer than those starting just a year before them.

"As well as extending the repayment term, the income threshold for repayments was also lowered. This means graduates will repay more on the same income than their predecessors - and repay for longer. Those who do not clear the finance earlier could still be making repayments as they edge towards retirement – though if they have not repaid the money in full by the end of the 40 years, the debt is wiped. This also applies if someone dies. Remember, repayment terms differ in Wales and Scotland where the debt is written off after 30 years while in Northern Ireland it is 25."

Some graduates may find they never earn enough to qualify for repayments, said Alice. She added: "Even those who do tip over the repayment threshold might find overpaying does not make sense. They may have a career break to raise a family, take time off for illness, go part-time, move to a job with a lower salary – all instances that could see their salary dip below the threshold at which they must repay. Dying prematurely will also wipe the debt.

"For higher earners that expect to earn a very high salary over the long term, then it may make more sense to overpay to clear the debt quicker and reduce the interest rate charges applied. None of us can see into the future, so those that start of their career should ignore the interest rate, accept the monthly payment and focus on saving towards other key financial goals."