Student Loans for Umbrella Employees

Depending on where you’re from and when you started studying, what you owe on your student loan and when you start repaying it, varies.

How you repay your loan will also hinge on your employment status. By this, we mean whether you’re employed (including as an umbrella employee) or self-employed.

What is a student loan?

A student loan is a loan made to university students to pay for tuition fees, as well as a separate payment for living costs.

The tuition fee payment is made directly to the university on the student’s behalf, by the Student Loans Company.

The maintenance loan is paid to the student to cover costs like rent, household bills and other outgoings.

What is the student loan repayment threshold?

There are four thresholds for student loan repayments, depending on which payment plan you’re on.


Plan 1 Plan 2 Plan 3 Plan 4
Northern Irish students who started an undergraduate or postgraduate course on or after 1 September 1998


English or Welsh Students who started university or higher education before 1st September 2012

English and Welsh students who started studying on or after 1st September 2012 Scottish students who started an undergraduate or postgraduate course on or after 1 September 1998 English and Welsh students who took out a Postgraduate Master’s Loan on or after 1 August 2016


English and Welsh students who took out a Postgraduate Doctoral Loan on or after 1 August 2018


  • On Plan 1, you must earn £20,195 a year before you start repaying your student loan
  • Under Plan 2, the threshold is £27,295 each year
  • On Plan 4, the threshold is £25,375 each year
  • For the Postgraduate Loan repayment plan, the threshold is £21,000 each year

For plans 1, 2 and 4, you’ll pay 9% of your income over the threshold to the Student Loans Company.

For the Postgraduate Loan, you’ll pay 6% of your income over the threshold.

Making student loan repayments

You don’t have to worry about repaying your student loan personally or finding out who to pay or how you pay them.

Instead, employees (including umbrella employees) have repayments automatically deducted from their earnings, via the PAYE system. This will be documented on your payslip, along with the amount paid.

In contrast, the self-employed – whether sole traders or limited company contractors – will typically make student loan repayments as part of their self-assessment tax return.

How your umbrella company knows you have a student loan

Your umbrella company will be made aware that you have a student loan, either directly by HMRC, or from the P45 or P46 (Starter Checklist) form that you gave them at the start of your assignment.

Do umbrella company employees have to pay off their student loan?

In short, yes. Anyone who’s received a student loan will start making repayments eventually, provided they earn over the threshold. However, any time your earnings drop below the threshold for your plan, you’ll stop making payments.

So, in summary:

  • You’ll only start paying your loan back when you reach the threshold for your plan. This threshold is different depending on when you started studying and where in the UK you’re from.
  • As an umbrella worker, your student loan repayments will be made automatically, with the umbrella company deducting these on your behalf.

If you have any questions about how student loans work for umbrella employees, please arrange a callback and one of our friendly experts will be in touch.

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