How is 9% calculated of earnings for plan 1 student loan repayment?

Buddy7

I've read the recent article on this website & on the SLC website about how much you re-pay, but I don't understand the figures. On the Money Saving Expert web post it says: if your annual salary (before tax) is £25,000, you'll repay £432 a year of your student loan, but 9% of £25,000 = £2250, isn't it?

Thanks in advance anyone!

AmityNeon

You only pay a percentage of earnings above a certain threshold. For Plan 1, that's £20,195 (yearly), £1,682 (monthly) or £388 (weekly).

£25,000 - £20,195 = £4,805
£4,805 * 9% = £432.45

https://www.gov.uk/repaying-your-student-loan/what-you-pay

eskbanker

It's income over a threshold that's subject to the 9% - the plan 1 threshold is £20,195, so £25,000 exceeds this threshold by £4,805, 9% of which is £432.

Edit: beaten to it by the above post!

MX5huggy

If you Salary Sacrifice to pension your salary is reduced for this calculation and you don’t pay it on the sacrificed salary. 

Alistair31

MX5huggy said:

If you Salary Sacrifice to pension your salary is reduced for this calculation and you don’t pay it on the sacrificed salary. 

Quite a nice little bonus that. 

silvercar

Alistair31 said:

MX5huggy said:

If you Salary Sacrifice to pension your salary is reduced for this calculation and you don’t pay it on the sacrificed salary. 

Quite a nice little bonus that. 

If you aren’t going to clear the loan. If you will clear the loan then it will incur extra interest.