Student Loans 2027/28

The Department for Education has confirmed the updates to student loan interests for the 2027/28 tax year.

The major change sees an increase in the threshold from £26,900 to £28,005 for Plan 1 (loans taken out between 1998 & 2012) borrowers before they start making repayments. Interest rates on the loans are based against an RPI rate of 4.1%

Plan 1:

Maximum interest of 4.1% (the lower of RPI or Bank Base Rate + 1%).

Plan 2:

(loans taken out between 2012 and 2023): Interest varies from RPI at 4.1% to RPI plus 3% at 7.1%, capped at 6%.

Plan 5:

(from 2023): Fixed at RPI of 4.1%.

Plan 3:

(postgraduate loans): RPI + 3% (7.1%), also capped at 6%.

Plan 4:

(Scottish student loan taken out post September 1998) remains unchanged with a repayment rate of 9% on earnings above £33,795 and interest charges of 3.2%. These figures may be revised later in the current tax year.

The Plan 2 payment threshold will remain frozen at £29,385 through to April 2030. The effect of this will mean that, with inflation wage increases, over the next few years, more of the income will be above the threshold meaning that borrowers will repay 9% on more of their earnings than they would have done if the threshold were to increase with RPI.

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For further information on this, or any other payroll matter, please contact your local Whitings office or your usual Whitings contact.