Income Contingent Student Loan repayment plans & interest rates and calculations (England)
Published 20 June 2024
Applies to England
© Crown copyright 2024
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This publication is available at https://www.gov.uk/government/statistics/student-loans-in-england-2023-to-2024/income-contingent-student-loan-repayment-plans-interest-rates-and-calculations-england
Income contingent student loan repayment plans
Repayment Plan 1 - prior to 1 September 2012
Repayments for Repayment Plan 1 loans are at the rate of 9% of income above the income threshold. The table below shows the change in income threshold for Plan 1 by financial year:
| Period applicable | Annual income threshold |
|---|---|
| 6 Apr 2000 to 5 Apr 2005 | £10,000 |
| 6 Apr 2005 to 5 Apr 2012 | £15,000 |
| 6 Apr 2012 to 5 Apr 2013 | £15,795 |
| 6 Apr 2013 to 5 Apr 2014 | £16,365 |
| 6 Apr 2014 to 5 Apr 2015 | £16,910 |
| 6 Apr 2015 to 5 Apr 2016 | £17,335 |
| 6 Apr 2016 to 5 Apr 2017 | £17,495 |
| 6 Apr 2017 to 5 Apr 2018 | £17,775 |
| 6 Apr 2018 to 5 Apr 2019 | £18,330 |
| 6 Apr 2019 to 5 Apr 2020 | £18,935 |
| 6 Apr 2020 to 5 Apr 2021 | £19,390 |
| 6 Apr 2021 to 5 Apr 2022 | £19,895 |
| 6 Apr 2022 to 5 Apr 2023 | £20,195 |
| 6 Apr 2023 to 5 Apr 2024 | £22,015 |
Repayment Plan 2 - post 1 September 2012
Repayments for Repayment Plan 2 loans are at the rate of 9% of income above the income threshold. The table below shows the change in income threshold for Plan 2 by financial year:
| Period applicable | Annual income threshold |
|---|---|
| 6 Apr 2016 to 5 Apr 2017 | £21,000 |
| 6 Apr 2017 to 5 Apr 2018 | £21,000 |
| 6 Apr 2018 to 5 Apr 2019 | £25,000 |
| 6 Apr 2019 to 5 Apr 2020 | £25,725 |
| 6 Apr 2020 to 5 Apr 2021 | £26,575 |
| 6 Apr 2021 to 5 Apr 2022 | £27,295 |
| 6 Apr 2022 to 5 Apr 2023 | £27,295 |
| 6 Apr 2023 to 5 Apr 2024 | £27,295 |
Borrowers normally become liable to make repayments from the April following the completion, or withdrawal from their course (their Statutory Repayment Due Date (SRDD)), however borrowers with Repayment Plan 2 loans did not first become liable to repay until April 2016 as repayments could not be taken through the tax system.
Where borrowers also have an outstanding Plan 1 loan, repayments are allocated based on 9% of the difference between the Plan 1 and Plan 2 thresholds; this is irrespective of a borrower’s actual income. Any repayments made prior to a borrower ‘s Plan 2 Statutory Repayment Due Date (SRDD) will be allocated in whole to a borrower’s Plan 1 loan.
Repayment Plan 3 - Postgraduate loans (England & Wales only)
Repayments for Repayment Plan 3 loans are at the rate of 6% of income above the income threshold. The first borrowers with Repayment Plan 3 loans became liable to repay from April 2019. The table below shows the change in income threshold for Plan 3 by financial year:
| Period applicable | Annual income threshold |
|---|---|
| 6 Apr 2019 to 5 Apr 2020 | £21,000 |
| 6 Apr 2020 to 5 Apr 2021 | £21,000 |
| 6 Apr 2021 to 5 Apr 2022 | £21,000 |
| 6 Apr 2022 to 5 Apr 2023 | £21,000 |
| 6 Apr 2023 to 5 Apr 2024 | £21,000 |
Where borrowers also have an outstanding Plan 1 or Plan 2 loan, repayment of the two loans will be made concurrently, totalling 15% of earnings above the threshold (9% for the Plan 1 or Plan 2 loan, plus 6% for the Plan 3 loan).
Repayment Plan 5 - post 1 August 2023 (England only)
Currently, repayments for Repayment Plan 5 loans will be at the rate of 9% of income above the income threshold. The first borrowers with Repayment Plan 5 loans will become liable to repay from April 2026.
Interest rates and calculations
Repayment Plan 1 loans
For Plan 1 ICR loans, the interest charge is affected by a cap at the bank base rate of +1%. The interest rate is the lower of the Retail Price Index (RPI) at the preceding March, or 1% above the highest base rate of a nominated group of banks calculated regularly during the year. For example, the RPI in March 2014 was 2.5% so the cap was applied from 1 September 2014 and 31 August 2015 where the interest rate was 1.5%. The RPI in March 2015 was 0.9% so the cap did not apply between 1 September 2015 and 31 August 2016 where the interest rate was 0.9%.
Note: The interest rate does not affect the monthly repayment amount; it will affect the time taken to repay.
The table below shows interest rate for Plan 1 loans by year:
| Period applicable | RPI @March | Plan 1 interest rate |
|---|---|---|
| 1 Sep 2012 to 31 Aug 2013 | 3.6% | 1.5% |
| 1 Sep 2013 to 31 Aug 2014 | 3.3% | 1.5% |
| 1 Sep 2014 to 31 Aug 2015 | 2.5% | 1.5% |
| 1 Sep 2015 to 31 Aug 2016 | 0.9% | 0.9% |
| 1 Sep 2016 to 31 Aug 2017 | 1.6% | 1.25% |
| 1 Sep 2017 to 31 Aug 2018 | 3.1% | 1.5% |
| 1 Sep 2018 to 31 Aug 2019 | 3.3% | 1.75% |
| 1 Sep 2019 to 31 Aug 2020 | 2.4% | 1.75% |
| 1 Sep 2020 to 31 Aug 2021 | 2.6% | 1.1% |
| 1 Sep 2021 to 31 Aug 2022 | 1.5% | 1.5% |
| 1 Sep 2022 to 31 Aug 2023 | 9.0% | 5.0% |
| 1 Sep 2023 to 31 Aug 2024 | 13.5% | 6.25% |
Repayment Plan 2 loans - post 1 September 2012
The Plan 2 interest charge is set each year from 30 September to 31 August. The interest rate whilst studying is Retail Price Index (RPI) +3% depending on a customer’s circumstances/income, except where the PMR cap is below RPI. This and remains so up until the borrower’s Statutory Repayment Due Date (SRDD) – usually the April following the completion, or withdrawal from their course. Once borrowers are due to repay, interest will be variable and income contingent.
A Variable Interest Rate (VIR) is an interest rate dependent upon the borrower’s earnings once they become liable to repay. It was a system introduced for loans taken out by England and Wales-funded entrants from academic year 2012/13 onwards. The interest rates are based on the RPI plus the VIR and are added to the amount owed from the day of first payment until the loan is repaid in full.
The RPI part of the interest rate is updated once a year in September, using the RPI from March of that year. Until the SRDD is reached the VIR part of the interest is 3%. The earliest SRDD for Plan 2 loans was April 2016 so the first financial year where the interest actually started varying was 2016-17.
Note: The interest rate does not affect the monthly repayment amount; it will affect the time taken to repay.
The table below shows the maximum interest rates for Plan 2 loans by year:
| Period applicable | RPI @March | Plan 2 - Max interest rate |
|---|---|---|
| 1 Sep 2012 to 31 Aug 2013 | 3.6% | 6.6% |
| 1 Sep 2013 to 31 Aug 2014 | 3.3% | 6.3% |
| 1 Sep 2014 to 31 Aug 2015 | 2.5% | 5.5% |
| 1 Sep 2015 to 31 Aug 2016 | 0.9% | 3.9% |
| 1 Sep 2016 to 31 Aug 2017 | 1.6% | 4.6% |
| 1 Sep 2017 to 31 Aug 2018 | 3.1% | 6.1% |
| 1 Sep 2018 to 31 Aug 2019 | 3.3% | 6.3% |
| 1 Sep 2019 to 31 Aug 2020 | 2.4% | 5.4% |
| 1 Sep 2020 to 31 Aug 2021 | 2.6% | 5.6% |
| 1 Sep 2021 to 31 Aug 2022 | 1.5% | 4.5% |
| 1 Sep 2022 to 31 Aug 2023 | 9.0% | 6.9% |
| 1 Sep 2023 to 31 Aug 2024 | 13.5% | 7.7% |
Those earning £25,000 or less were charged at the rate of inflation (RPI), interest rates for those earning between £25,000 and £41,000 will be on a sliding scale from RPI to RPI +3%; and those earning £41,000 or more will accrue interest at RPI +3%.
Borrowers who do not respond to requests for information or evidence (as they are required to do under the terms and conditions of their loans) become ‘Non-Compliant’ and incur the highest interest rates of RPI +3% irrespective of income, until all required information is received. The table below indicates the % of Plan 2 borrowers incurring the variable part of the interest in force at the end of financial-year 2023-24:
Tax year ending 2023-24 - variable part of interest rate incurred (Plan 2 only)
| 0% | 0.01-0.99% | 1.00-1.99% | 2.00-2.99% | 3% |
|---|---|---|---|---|
| 97.7% | 0.3% | 0.3% | 0.2% | 1.5% |
- Those who are accruing RPI +3% are equivalent to circa. 54,300 out of 3.6 million Plan 2 borrowers.
- Of the 1.5% who are accruing RPI +3%, 75.4% are non-compliant.
- Non-compliant makes up circa. 41,000 Plan 2 borrowers.
Repayment Plan 3 loans - Postgraduate loans (England & Wales only)
Plan 3 interest charge is also set each year from 30 September to 31 August. The interest rate whilst studying is Retail Price Index (RPI) +3% (except where the PMR cap is below RPI) and remains so throughout repayment.
Note: The interest rate does not affect the monthly repayment amount; it will affect the time taken to repay.
The table below shows the interest rates for Plan 3 loans by year:
| Period applicable | RPI @March | Plan 3 - interest rate |
|---|---|---|
| 1 Sep 2016 to 31 Aug 2017 | 1.6% | 4.6% |
| 1 Sep 2017 to 31 Aug 2018 | 3.1% | 6.1% |
| 1 Sep 2018 to 31 Aug 2019 | 3.3% | 6.3% |
| 1 Sep 2019 to 31 Aug 2020 | 2.4% | 5.4% |
| 1 Sep 2020 to 31 Aug 2021 | 2.6% | 5.6% |
| 1 Sep 2021 to 31 Aug 2022 | 1.5% | 4.5% |
| 1 Sep 2022 to 31 Aug 2023 | 9.0% | 6.9% |
| 1 Sep 2022 to 31 Aug 2023 | 13.5% | 7.7% |
Prevailing Market Rate (PMR) cap affecting Plans 2, 3 and 5 interest rates
The Government regularly monitors the maximum interest rate against the interest rates prevailing on the market for comparable loans. Where the Government considers that the maximum interest rate interest rate is too high in comparison to the Prevailing Market Rate (PMR), it will reduce the rate by applying a cap for a set period of one month or longer, which ensures that customers are not being charged a higher interest rate than the average found in the commercial market.
PMR first came into effect between 1 July 2021 and 28 February 2022, at varying rates during this period. PMR was not in effect from 1 March 2022 to 31 August 2022. PMR again came into effect from 1 September 2022 to 31 August 2023, at varying rates during this period.
The table below illustrates when a cap has been in effect and the varying rates of the cap vs. RPI.
| Month | RPI | PMR Cap |
|---|---|---|
| 1 July 2021 to 31 August 2021 | 2.6% | 5.3% |
| 1 September 2021 to 30 September 2021 | 1.5% | 4.2% |
| 1 October 2021 to 31 December 2021 | 1.5% | 4.1% |
| 1 January 2022 to 28 February 2022 | 1.5% | 4.4% |
| 1 September 2022 to 30 November 2022 | 9.0% | 6.3% |
| 1 December 2022 to 28 February 2023 | 9.0% | 6.5% |
| 1 March 2023 to 31 May 2023 | 9.0% | 6.9% |
| 1 June 2023 to 31 August 2023 | 9.0% | 7.1% |
| 1 September 2023 to 30 November 2023 | 13.5% | 7.3% |
| 1 December 2023 to 31 December 2023 | 13.5% | 7.5% |
| 1 January 2024 to 29 February 2024 | 13.5% | 7.6% |