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

Buddy7
Buddy7 Posts: 2 Newbie
edited 17 March 2023 at 10:18AM in Student MoneySaving
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!

Comments

  • AmityNeon
    AmityNeon Posts: 891
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    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
    eskbanker Posts: 29,855
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    edited 16 March 2023 at 12:31PM
    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
    MX5huggy Posts: 6,804
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    If you Salary Sacrifice to pension your salary is reduced for this calculation and you don’t pay it on the sacrificed salary. 
  • Alistair31
    Alistair31 Posts: 936
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    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
    silvercar Posts: 46,750
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    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.
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