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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: 1,085 Forumite
    1,000 Posts Second Anniversary Photogenic Name Dropper
    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: 38,556 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    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: 7,170 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    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: 982 Forumite
    Seventh Anniversary 500 Posts Name Dropper
    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: 50,133 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    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.
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