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The Department of Education (DfE) has announced new repayment thresholds for Student Loan Plans 1 and 2, effective for the tax year 2020/21.
On 6 April 2020, the Student Loan Plan 1 repayment threshold will rise from £18,935 to £19,390. The current Student Loan Plan 2 repayment threshold will also rise from £25,725, to £26,575.
Where earnings exceed the thresholds for both Plan 1 and Plan 2 in 2020/21, repayments will still be calculated at 9 per cent.
The threshold for repaying the postgraduate loan type, introduced in the 2019/20 tax year and which currently stands at £21,000, will remain the same in 2020/21 and repayments will continue to be calculated at 6 per cent of any earnings above this.
These figures will apply to all current and future borrowers for whom employers make Student Loan deductions.
The new repayment system:
In the same year that the repayment thresholds increase, a new online service will also be implemented in a bid to modernise the Student Loans Company (SLC) repayment system.
The new system will enable former students to manage their balance more efficiently and give them access to the most up-to-date information relating to their student loan.
With developments in Real Time Information (RTI) and employers being required to send Full Payments Submissions (FPS) each pay cycle, the data needed to facilitate a digital service is more readily available and so arises the opportunity to replace regular paper statements.