After taking effect officially on April 6, the student repayment thresholds in the UK for Plan 1 and 2 will increase for the 2018-2019 school year. These repayment thresholds will be subject to change in the years to come if they find that they need to be adjusted to remain in line with current income earnings. Here is a breakdown of the changes for these two plans.
How This Has Affected Plan 1 Individuals
According to this article by the Student Loan Co., if you are on Plan 1 then that means you are:
• An English or Welsh student who started your undergraduate course before Sept. 1, 2012.
• An Scottish or Northern Irish student: The repayment threshold for Plan 1 will increase from £17,775 to £18,330, a difference of £555.
How This Has Affected Plan 2 Individuals
Plan 2 differs from Plan 1 and has received the most significant increase of the two plans. If you are on Plan 2 then that means you are:
• An English or Welsh student who started your undergraduate course on or after Sept. 1, 2012.
The repayment threshold for Plan 2 will increase from £21,000 to £25,000, a difference of £4,000.
What This Really Means
This change means that you will need to pay 9 percent of everything you earn above these new thresholds. With the increase in these thresholds, it will mean that repayment will take longer, but it will ease the burden on those who are struggling to make ends meet and carry the burden of their student loan debt.
If you are currently employed in the UK, you should make sure you check your payslips to ensure that the amount that is being taken out has been adjusted in line with these new changes; if you are self-employed, then the HMRC will calculate how much you owe for the year according to this new repayment threshold. If you believe that your employer has made an error, then you should talk to them immediately to make sure that it gets adjusted promptly.
This new change will not affect postgraduate loans as its threshold will remain at £21,000. However, it will affect oversea thresholds, though they may vary due to different costs of living. For a complete rundown of what the new overseas thresholds are, you can review this comprehensive list.