A brand new type of student loan has been added by the UK government as of April 2021 - ‘Plan 4’.
The new loan plan is exclusive to Scottish students who started a degree anywhere in the UK and any EU students who started a degree in Scotland from 1st September 1998.
Use our Student Loan Repayments Calculator to figure out exactly what you’ll repay.
What does that mean for me?
If you’re a Scottish student or an EU citizen studying in Scotland and already have a student loan you will have been repaying under Plan 1 - now you will be moved to Plan 4.
The only real difference between Plan 1 and Plan 4 is that Plan 4 has a much higher repayments threshold - which means that you have to earn a higher salary before you start making student loan repayments.
The Plan 1 repayments threshold for 2021 is £19,895 per year before tax (£1,658 per month or £383 per week).
The new Plan 4 repayments threshold for 2021 is £25,000 per year before tax (£2,083 per month or £480 per week) - so good news for Scottish students!
How Student Loan Plan 4 interest rates are calculated
Interest rates will be calculated in the same way as Plan 1 loans, where interest is added yearly (usually in September). The rate of interest is whichever figure is lower at the time:
- RPI (Retail Price Index) for the current year
- Base interest rate (set by the Bank of England) plus 1%
For 2021 the interest rate applied to Plan 4 loans is 1.1%; which is the Base Interest Rate (0.1%) plus 1%.
How much will I have to repay
The student loan repayments threshold for Plan 4 is £25,000 per year before tax (£2,083 per month or £480 per week). This means you have to earn over this amount before you start paying back your loan.
You will have to pay back 9% of any of your earnings over the threshold of £25,000. For example:
If you earn £35,000 per year, you will repay 9% of £10,000 (because you earn £10,000 more than the repayment threshold of £25,000).
Use our Student Loan Repayments Calculator to figure out exactly what you’ll repay.
When will my Student Loan be written off?
Plan 4 Student Loans could be written off before you fully repay your full loan amount. Usually your loan can be written off (you no longer have to make repayments) if:
- You’ve turned 65 years old
- 30 years have passed since you first became eligible to repay your loan
Otherwise, your loan may also be written off if you can no longer work and receive disability-related benefit.
You can also figure out how much of your salary you’ll take home after your student loan repayments with our Salary Calculator.