CSLM2010 - About CSL: overview of student loans: student loans
Student Loans are part of the Government’s financial support package for students carrying out a course of higher education in the United Kingdom. They are available to help students meet their living costs.
Different types of student loan
There are two types of loan.
Fixed - term repayment loans (old - style loans)
For a number of years, students have been entitled to apply for loans, known as ‘fixed - term repayment’ loans. They are sometimes referred to as ‘mortgage - style loans’. The main features of these loans are
- Repayments are made directly to the Student Loans Company
- The borrower can apply for deferment of repayments if his or her income is less than the annual threshold
- Once the income threshold is exceeded, or if the borrower does not apply for deferment, all borrowers make the same repayments, normally by monthly direct debit
- These loans were available to students commencing a course of higher education up to and including the academic year 1997-98
- Repayment of these loans may continue for many years
Note: HMRC is not responsible for collecting repayments of fixed - term repayment loans. These will continue to be repaid directly to the Student Loans Company. No further details of these loans are therefore given in this Manual.
Income - Contingent Loans (new - style loans)
These loans replaced the fixed - term repayment loans, and are available to students commencing a course of higher education from the academic year 1998-99, (August 1998). Some students who started their course in the 1998-99 academic year were entitled to the old style loans because they had already gained a place on the course, that is, GAP year students.
The main features of these loans are
- The earliest possible repayment date is 6 April following the tax year in which the borrower ceased the course in Higher Education. The first repayments for this type of loan were due from 6 April 2000
- Borrowers resident in the UK make repayment to HMRC. Borrowers not resident in the UK make repayment directly to the Student Loans Company
- There is an annual threshold, below which repayments are not due. If the borrower’s income is above the threshold repayments will be made according to the level of income.
From 6 April 2016, Department for Eductaion (DfE) introduced an additional student loan plan type known as Plan 2.
From April 2019, DfE introduced a new loan for England and Wales known as Postgraduate Loan (PGL). PGL has a different threshold and rate. The employer will be sent a start notice (PGL1) to commence PGL deductions.
From 6 April 2021 The Scottish Government introduced a new plan type for Scottish student loan borrowers known as Plan 4. This change will impact employers across the UK, not only those located in Scotland. The employer will be sent an SL1 to either switch from plan 1 to plan 4 or to start taking under Plan 4.
Each plan type 1, 2 and 4 all have different thresholds. Employers may be asked to deduct under Plan 1 or 2 or 4 at the same time as PGL. This information will be shown on the Student and or Postgraduate Loan start notice (SL1 and or PGL1). If the employee does not know their Plan or loan type they can log onto their Student Loan account or alternatively, contact the Student Loans Company to find out this information.
More information on this can be found here https://www.gov.uk/guidance/special-rules-for-student-loans# loan/plan-types.
Note: HMRC is responsible for collecting repayments of income contingent student loans. References to Student Loans in this Manual therefore refer to this type of loan
Borrowers with more than one type of loan
A student may have applied for fixed - term repayment loans whilst undertaking a course in higher education that started prior to 1998-99. These loans would continue to be made until the end of that course.
The student may then commence another course, during or after 1998-99 and obtain an income contingent loan.
The earlier loans would be repayable to the Student Loans Company. The later, (income contingent), loans would normally be collected by HMRC.
Note: In certain circumstances the borrower can arrange to defer repayment of a loan by contacting the Student Loans Company. If you receive such a query from a borrower always refer the borrower to the Student Loans Company.
Repayment of Teachers Loans (RTL) Scheme
This scheme has now been withdrawn.
Any enquiries regarding the scheme should be directed to the Student Loans Company.