Question to the Department for Education:
To ask the Secretary of State for Education, what marginal rate of taxation a student will be paying every year for the next five years who is repaying a loan on plan 4, earning over the repayment threshold and paying the basic rate of income tax.
The amount that a borrower is required to repay is calculated on the basis of income subject to National Insurance contributions (for UK-resident PAYE borrowers) or income subject to tax (for borrowers required to complete a Self-Assessment Tax form or borrowers resident overseas).
For Plan 1, Plan 2 and Plan 4 undergraduate student loans, borrowers currently repay 9% of earnings over the relevant repayment threshold. This is in addition to tax paid, irrespective of the rate of tax. Current repayment thresholds are £20,195 for Plan 1, £27,295 for Plan 2 and £25,375 for Plan 4 student loans.