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Changes to student loans: What you need to know

4th Mar 2020
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The rates for student loans Plan 1 and Plan 2 are changing from 6th April 2020.


Student loans are available for students in higher education in the UK to help them meet their expenses while they study. 

After their studies, borrowers repay their loans through payroll. Plan 1 loan rates apply to those who started their studies before 1 September 2012 and Plan 2 repayments apply to all those who started studying after this date. 

In the tax year 2020/21 the Student Loan Plan 1 rate will rise from £18,935 to £19,390 per year and the Plan 2 rate, which currently is £25,725 will rise to £26,575.

All earnings above the thresholds for both Plan 1 and Plan 2 for 2020/21 will still be calculated at 9%.

Although both the Plan 1 and Plan 2 are changing, the rate of the postgraduate loan will remain the same in 2020/21 at £21,000 and will continue to be calculated at 6%.


2019/2020 rate

2020/21 rate

Plan 1 student loans



Plan 2 student loans




Processing student loans in BrightPay

Employers are responsible for making deductions for the repayments from their employees’ earnings when applicable, as well as for keeping records of these deductions and paying them to HMRC.

BrightPay automatically calculates and applies the appropriate student loan deduction. To process a new employee, you only need to:

  1. Go to Employees and select the employee’s name on the left

  2. Click on the Tax/ NICs/RTI heading

  3. Select the drop-down arrow for Student Loan and choose the applicable Student Loan Plan

  1. Enter a start date and stop date, if known

  2. Click Save Changes

In BrightPay 2020/21, the new student loan repayment thresholds for both plans will automatically be calculated and the appropriate student loan deduction applied so that you don’t need to worry about making any changes to the way you normally process the loan repayments. 

New to BrightPay? Try it for free for 60 days.