Repaying more than one student loan (2024)

More than one student loan: how repayments work

If you are unsure what loans you have, contact theStudent Loans Company (SLC).

If you have more than one student loan on different Plan 1, Plan 2 or Plan 4 loan agreements then you will still make one repayment, for example through your employer’s payroll or throughself assessment if you complete a tax return.

If you are an employee, your form P45 will not show which type of loan(s) you have, so your employer should ask you what student loans you are repaying. If you do not confirm what loan type you have, you will automatically be allocated a Plan 1 loan and this may result in incorrect repayments being deducted through Pay As You Earn (PAYE).

Please note: this differs from howpostgraduate loans are collected if you are also repaying a Plan 1, Plan 2 or a Plan 4 loan.

Your student loan repayment will be allocated against the two types of loans depending on how much you earn and the repayment thresholds for the loans.

Allocation of repayments: more than one student loan

Different student loan plans have different repayment thresholds. If you have more than one student loan under Plan 1, Plan 2 or Plan 4, your repayments would be allocated as follows:

  • For earnings below the lowest repayment threshold of your plan types – you make no loan repayments.
  • For earnings between the lowest repayment threshold and the repayment threshold of your other plan type – you will make loan repayments towards your plan with the lowest repayment threshold.
  • For earnings above your highest repayment threshold – your repayments will be allocated towards both loans.

Plan 1 and Plan 2 loans: repayment allocation

For the 2024/25 tax year, the repayment thresholds are as follows:

  • Plan 1 loans: £24,990
  • Plan 2 loans: £27,295

If you earn below £24,990, you will make no loan repayments.

If you earn between £24,990 and £27,295, you will make Plan 1 loan repayments only.

If you earn over £27,295, you will make repayments which will be spread across both your Plan 1 and Plan 2 loans. Repayments calculated on income between £24,990 and £27,295 will be allocated against your Plan 1 loan and repayments calculated on your income above £27,295 will be allocated against your Plan 2 loan.

Example – Plan 1 and Plan 2 loan repayments

Nathan has completed two courses, one started in 2009 and one in September 2017. He has two student loans, one is a Plan 1 loan and one is a Plan 2 loan. He finished his second course in July 2020 and after spending some time travelling and volunteering he started his firstemployed job in April 2024. If he earns over the repayment thresholds his first repayment will be due in April 2024.

Nathan earns £17,000 per year

Nathan is not earning above the repayment threshold for either his Plan 1 or Plan 2 loans and so will not start repayments.

Nathan earns £26,000 per year

Nathan is earning above the Plan 1 and the Plan 2 repayment thresholds. Although Nathan will only see one deduction on his payslip, which totals £270.90 across the tax year or £22.56 per month, this will be split between his two student loans.

The annual repayments are calculated as (£28,000 - £24,990) x 9%, so £3,010 x 9% = £270.90.

The allocation is then split as follows:

  • Plan 1 loan:£27,295 - £24,990 (the Plan 1 repayment threshold) at 9%
    = £2,305 x 9% = £207.45 per year or £17.28 per month
  • Plan 2 loan: £28,000 - £27,295 (the Plan 2 repayment threshold) at 9%
    = £705 x 9% = £63.45 per year or £5.28 per month

If Nathan is not an employee but is self-employed and made profits of £28,000, he would complete aself assessment tax return. His repayments will still be calculated as £270.90 for the 2024/25 tax year and will be allocated the same as above.

Plan 2 and Plan 4 loans: repayment allocation

For the 2024/25 tax year the repayment thresholds are:

  • Plan 2 loans: £27,295
  • Plan 4 loans: £31,395

If you earn below £27,295 you will make no loan repayments.

If you earn between £27,295 and £31,395 you will make Plan 2 loan repayments only.

If you earn over £31,395 you will make repayments which will be spread across both your Plan 2 and Plan 4 loans. This means that repayments calculated on income between £27,295 and £31,395 will be allocated against your Plan 2 loan and repayments calculated on your income above £31,395 will be allocated against your Plan 4 loan.

Example – Plan 2 and Plan 4 loan repayments

Dan has completed two courses, one started in 2009 and one in September 2018. He has two student loans, one was a Plan 1 Scottish student loan which has changed to a Plan 4 loan from April 2021 and one is a Plan 2 loan. He finished his second course in July 2019 and started work soon after graduating from his second course. Dan earns £32,000 per year and for the 2024/25 tax year his repayments are shown below.

As Dan is earning above the Plan 4 and the Plan 2 repayment thresholds, he will be repaying both of his loans. Although Dan will only see one deduction on his payslip which totals £423.45 across the tax year or £35.28 per month, this will be split between his two student loans.

The annual repayments are calculated as (£32,000 - £27,295) x 9%. So £4,705 x 9% = £423.45.

This is then split as follows:

  • Plan 2 loan: £31,395- £27,295 (the Plan 2 repayment threshold) at 9%
    = £4,100 x 9% = £369 per year or £30.75 per month
  • Plan 4 loan: £32,000 - £31,395 (the Plan 4 repayment threshold) at 9%
    = £605 x 9% = £54.45 per year or £4.54 per month.

Direct debit repayments: more than one loan

Towards the end of repaying your loans, you can switch to monthly direct debits when you have fully repaid one loan and you expect to finish repaying your other loan over the next two years. See further guidance on this on ourEmployees: student loan repayments page.

Repayment start dates: more than one loan

If you have more than one student loan, you usually start to repay your loan if you are earning over the repayment threshold from the April after you graduate from each course separately.

Example – repayment start dates where you have more than one student loan

Let’s say you have both a Plan 1 and Plan 2 loan and you graduated from your first course in July 2012 and from your second course in July 2024. You begin a new job in August 2024 earning £28,000 annually.

You will immediately start repaying your Plan 1 loan as you graduated from the course in July 2012, but you will not start repaying your Plan 2 loans until the April after you graduated from that course, so Plan 2 repayments will start from April 2025.

Repaying more than one student loan (2024)

FAQs

Repaying more than one student loan? ›

If you have multiple federal student loans, you can consolidate them into a single Direct Consolidation Loan. This might simplify repayment if you are currently making separate loan payments to different loan holders or servicers, since you'll only have one monthly payment to make.

What is the best way to pay off multiple student loans? ›

Another way to approach your repayment strategy is to evaluate how much you owe on each of your loans and use the debt snowball method to prioritize payoff. The debt snowball method means paying the debt with the lowest balance first while making minimum payments on the rest.

Can you have two student loans at the same time? ›

It's possible that, like many students, you're considering taking out more than one loan to make the process easier. Of course, it's possible to have simultaneous loans, but before you apply for more student loans, you should be aware of some of the effects this might have on your future.

What is the downside of consolidating multiple student loans into one payment? ›

Consolidation has potential downsides, too: Because consolidation can lengthen your repayment period, you'll likely pay more in interest over the long run.

Is it better to pay off one student loan at a time? ›

Pay off the student loan with the highest interest rate first. That will save you the most money over time. NerdWallet's ratings are determined by our editorial team.

How long does it take to pay off $50k in student loans? ›

On the standard 10-year repayment plan, you'd pay $561 per month and $17,277 in interest over time.

Is there a downside to paying off student loans early? ›

If you have federal student loans and pay them off early, you could lose the opportunity to take advantage of a student loan forgiveness program (if you qualify). If it's still worth it to you to pay off your student loans quickly, it may help to refinance your student loans as part of the process.

Do student loans go away after 7 years? ›

Do student loans go away after 7 years? While negative information about your student loans may disappear from your credit reports after seven years, the student loans will remain on your credit reports — and in your life — until you pay them off.

Is it better to pay off subsidized or unsubsidized first? ›

Which Student Loans Should You Pay First: Subsidized or Unsubsidized? It's a good idea to start paying back unsubsidized student loans first, since you're more likely to have a higher balance that accrues interest much faster.

Can I take out another student loan if I already have one? ›

It doesn't matter how many student loans you already have. The only thing that matters is whether you've reached the annual or the aggregate federal direct student loan limit. If you've hit that limit, you won't be eligible for more federal direct loans.

What is the catch if you consolidate your student loans? ›

Federal student loans provide options for borrowers who run into trouble, including income-driven repayment (IDR). If you consolidate with a private lender, you will lose your rights under the federal student loan program, including deferment, forbearance, cancellation, and affordable repayment options .

What student loans Cannot be consolidated? ›

What types of loans can I consolidate? Private education loans are not eligible for consolidation. Direct PLUS Loans received by parents to help pay for a dependent student's education cannot be consolidated together with federal student loans that the student received.

Why did my credit score go down when I consolidate my student loans? ›

You credit report likely shows a new hard inquiry

To refinance your student loans, you'll have to submit an application to a lender. The lender will then pull your credit report to decide if you qualify for the new loan. This is known as a hard inquiry, and one can lower your credit score.

What is the smartest way to pay off student loans? ›

Paying a little extra each month can reduce the interest you pay and reduce your total cost of your loan over time. Continue to make monthly payments even if you've satisfied future payments, and you'll pay off your loan faster.

What happens if you never pay off your student loans? ›

Eventually, your student loans will be put into default and you may lose federal loan benefits, have your wages garnished, get barred from federal student aid among other consequences. Your loan holder may sue you, as well. If you ignore the court date or the court's orders — that could land you in jail.

What is the ideal time to pay off student loans? ›

10 years is the ideal timeline for paying off student loan debt according to financial experts and the U.S. Department of Education (ED). In practice, it takes borrowers closer to 20 years to pay off their student loans. 45% of student loan borrowers decrease their balance in the first five years of repayment.

What is the fastest way to pay off student loans? ›

Pay More than Your Minimum Payment

Paying a little extra each month can reduce the interest you pay and reduce your total cost of your loan over time. Continue to make monthly payments even if you've satisfied future payments, and you'll pay off your loan faster.

What order should I pay off student loans? ›

Focusing on repaying your loan with the highest interest rate first can help you save the most money on interest charges. This is commonly known as the debt avalanche method.

How to pay off multiple federal student loans? ›

Consider consolidating if you have multiple servicers. Set up automatic payments, and make extra payments if you can, so you can pay less interest in the long run.

Is there a way to consolidate all student loans? ›

A Direct Consolidation Loan allows you to consolidate (combine) multiple federal student loans into one loan with a single monthly payment. Use the application below to consolidate your loans.

References

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