Updated the annual income thresholds for Plan 1, 2, 3, and 5 student loan repayments effective from 6 April 2025.
These Regulations amend the Education (Student Loans) (Repayment) Regulations 2009 to establish new income repayment thresholds for student loan borrowers in the United Kingdom.
The rules apply to borrowers with Plan 1, Plan 2, Plan 3 (Postgraduate), and Plan 5 loans, as well as to employers responsible for deducting repayments via the tax system.
The instrument sets the specific pound-amount limits at which borrowers must begin contributing a percentage of their income toward their debt for the 2025-26 tax year.
Arguments For
The regulations state that these changes fulfill the statutory requirement to update repayment thresholds annually in line with inflation or specific price indices.
The document specifies that Plan 1 thresholds are adjusted based on the Retail Prices Index (RPI) for the year to March 2024, maintaining the real-term value of the income limit.
Proponents within the Department for Education suggest that raising these thresholds prevents borrowers from facing increased repayments solely due to inflationary wage growth.
Arguments Against
Financial analysts have noted that using different indices (RPI for Plan 1 vs. fixed or RPI-linked for others) creates varying outcomes for borrowers depending on when they studied.
Student advocacy groups have previously questioned the decision to maintain lower thresholds for Plan 2 loans compared to what they would be if linked to higher earnings growth metrics.
Legal observers may note that the complexity of managing four distinct repayment plans increases the administrative burden on employers and the Student Loans Company.
1. Citation, commencement, extent and application
(1) These Regulations may be cited as the Education (Student Loans) (Repayment) (Amendment) (No. 4) Regulations 2024.
(2) These Regulations come into force on 6th April 2025.
(3) These Regulations extend to England and Wales, Scotland and Northern Ireland.
(4) These Regulations apply to repayments of student loans made under the Education (Student Loans) (Repayment) Regulations 2009.
This section establishes the official name of the law and sets its start date as 6 April 2025.
It confirms that the rules apply across the entire United Kingdom and govern loans issued under the 2009 repayment framework.
2. Amendment of the Education (Student Loans) (Repayment) Regulations 2009
The Education (Student Loans) (Repayment) Regulations 2009 are amended in accordance with regulations 3 to 5.
This provision acts as a legal bridge, stating that the subsequent sections of this document will directly change the text of the existing 2009 Regulations.
It ensures the new figures replace the old ones in the primary body of student loan law.
3. Amendment of regulation 29 (Repayment by way of account through the tax system)
In regulation 29—
(a) in paragraph (2), for “£24,990” substitute “£26,065”;
(b) in paragraph (3), for “£27,295” substitute “£28,470”;
(c) in paragraph (4), for “£21,000” substitute “£21,905”;
(d) in paragraph (5), for “£25,000” substitute “£25,390”.
This section updates the annual income thresholds that trigger loan repayments through the UK tax system.
It increases the Plan 1 threshold to £26,065, Plan 2 to £28,470, Plan 3 (Postgraduate) to £21,905, and Plan 5 to £25,390.
Borrowers only pay a percentage of their income that exceeds these specific amounts.
4. Amendment of regulation 44 (Amount of repayments)
In regulation 44—
(a) in paragraph (1), for “£24,990” substitute “£26,065”;
(b) in paragraph (2), for “£27,295” substitute “£28,470”;
(c) in paragraph (3), for “£25,000” substitute “£25,390”.
This section updates the repayment figures used to calculate the specific amount of money deducted from a borrower's pay.
These changes mirror the thresholds in section 3, ensuring consistency between the definition of the threshold and the actual calculation of the repayment amount.
5. Amendment of regulation 76 (Calculation of repayment)
In regulation 76(1), for “£21,000” substitute “£21,905”.
This provision updates the specific calculation for Plan 3 (Postgraduate) loans.
It raises the income level used to determine these repayments to £21,905, aligning it with the other changes in the regulations.
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