Key facts
- You repay 9% of income above your plan threshold, or 6% on a Postgraduate Loan, through PAYE
- On £35,000, Plan 2 costs £505 a year, Plan 5 £900 and a Postgraduate Loan £840
- Thresholds for 2026/27: Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000, Postgraduate £21,000
- Loans are written off after 25, 30 or 40 years depending on the plan, even if a balance remains
Your repayment is taken straight from your wages, shown as a line on your payslip in how to read your payslip guide, alongside income tax explained in income tax bands guide and National Insurance in National Insurance rates guide.
| Annual salary | Plan 1 (over £26,900) | Plan 2 (over £29,385) | Plan 4 (over £33,795) | Plan 5 (over £25,000) | Postgraduate (over £21,000) |
|---|---|---|---|---|---|
| £28,000 | £99 | £0 | £0 | £270 | £420 |
| £30,000 | £279 | £55 | £0 | £450 | £540 |
| £35,000 | £729 | £505 | £108 | £900 | £840 |
| £40,000 | £1,179 | £955 | £558 | £1,350 | £1,140 |
| £50,000 | £2,079 | £1,855 | £1,458 | £2,250 | £1,740 |
Repayment is 9% of income above the threshold, 6% for the Postgraduate Loan, rounded to the nearest pound. Source: GOV.UK thresholds, verified June 2026, WhatsUK calculation.
To see your full deductions and what actually lands in your account, use the contractor take home calculator.
UK student loans are not like bank loans. They are repaid as a percentage of income above a threshold, through payroll, and are written off after a set number of years regardless of the balance remaining. Most graduates on Plan 2 will never fully repay their loan. Understanding how the system works protects you from making financially irrational decisions, such as making voluntary overpayments when the loan will be written off before you could ever clear it.
Each plan: threshold, write-off and interest
Plan 1: threshold £26,900, written off 25 years after the April you were first due to repay if your first loan was on or after 1 September 2006, or at age 65 if before that date. Interest 3.2%.
Plan 2: threshold £29,385, written off 30 years after the April you were first due to repay. Interest is variable, 3.2% at income of £29,385 or less rising to 6.2% at £52,885 or more, and 6.2% while studying.
Plan 4 (Scotland): threshold £33,795, written off 30 years after the April you were first due to repay if your first loan was on or after 1 August 2007. Interest 3.2%.
Plan 5: threshold £25,000, written off 40 years after the April you were first due to repay. Interest 3.2%.
Postgraduate Loan (England and Wales): threshold £21,000, repaid at 6%, written off 30 years after the April you were first due to repay. Interest 6.2%.
The four repayment plans: a comparison
| Plan | Who it applies to | 2026/27 threshold | Rate | Write-off after |
|---|---|---|---|---|
| Plan 1 | Started before Sept 2012 (Eng/Wales) or NI | £26,900/year | 9% | 25 years or age 65 |
| Plan 2 | Started Sept 2012 or later (Eng/Wales) | £29,385/year | 9% | 30 years |
| Plan 4 | Studied in Scotland | £33,795/year | 9% | 30 years |
| Plan 5 | Started Sept 2023 or later (England) | £25,000/year | 9% | 40 years |
| Postgraduate Loan | Postgraduate Master's or PhD | £21,000/year | 6% | 30 years |
Monthly repayments at different salary levels (2026/27)
| Annual salary | Plan 2 (£29,385) | Plan 1 (£26,900) | Plan 5 (£25,000) |
|---|---|---|---|
| £25,000 | £0 | £0 | £0 |
| £28,000 | £0 | £8/month | £22.50/month |
| £30,000 | £5/month | £23/month | £37.50/month |
| £35,000 | £42/month | £61/month | £75/month |
| £40,000 | £80/month | £98/month | £112.50/month |
| £50,000 | £155/month | £173/month | £187.50/month |
| £60,000 | £230/month | £248/month | £262.50/month |
Salary Calculator
See your exact monthly student loan deduction alongside tax and NI.
The Plan 2 truth most graduates do not know
Plan 2 loans accrue interest during study and repayment at a rate linked to RPI inflation plus up to 3%. With typical tuition fees of £9,250 per year over three years, plus maintenance loans, a Plan 2 graduate starts repayment with a debt of £45,000 to £65,000, depending on the university and living costs.
At a salary of £35,000, the annual repayment is £505 (approximately £42 per month). With interest of 3.2% to 6.2% on a £50,000 balance, the debt can grow faster than repayments at lower salaries. The balance may rise even while repayments are being made.
Only at higher salaries on a Plan 2 loan does the annual repayment start to match and then exceed the interest accruing. Below this salary level, for much of the 30-year repayment period, many graduates are paying toward interest only, and the principal barely falls.
This means: for most Plan 2 graduates, especially those in lower to middle-earning careers, the loan will be written off after 30 years with a significant balance remaining.
Practical implication: If your projected career earnings suggest the loan will be written off before you clear it, making voluntary overpayments is financially irrational. You would be repaying money you would never have been required to repay, with no investment return on those funds.
Expert Tip
The only scenario where voluntary student loan overpayments make financial sense is if you are confident your career earnings will allow you to fully repay the loan well before the write-off deadline. If the projection shows the loan being written off with a large balance remaining, treat the monthly deduction as a graduate contribution tax and invest your disposable income in ISAs or pensions instead.Thresholds change every year
Student loan repayment thresholds are typically adjusted annually. Plan 1 thresholds are uprated by the lower of RPI or average earnings growth. Plan 2 and Plan 4 thresholds have been subject to government policy changes. Plan 5 thresholds are frozen at £25,000 for several years, meaning as wages rise, more graduates begin repaying more quickly on Plan 5 than they would on Plan 2.
Always confirm the current threshold with the Student Loans Company at gov.uk/repaying-your-student-loan, especially if you are self-employed (where repayments are collected through self-assessment rather than payroll).
Repayment for the self-employed
Employed borrowers repay automatically through PAYE. Self-employed borrowers repay through self-assessment. The Student Loans Company notifies HMRC of your loan plan, and HMRC includes the repayment in your self-assessment calculation. The same 9% rate above threshold applies, but it is calculated on self-assessment profit rather than PAYE salary.
The self-assessment payment is due on 31 January alongside income tax. It is not deducted monthly, which means self-employed borrowers must plan for the lump sum.
Self Assessment Calculator
Include your estimated student loan repayment in your annual tax planning.
Multiple plans: what happens when you have more than one loan
Some graduates have both Plan 2 undergraduate and Postgraduate Loan repayments running simultaneously. Both are deducted through PAYE at their respective rates, stacking on top of each other.
Example at £35,000 salary:
Plan 2 deduction: £505/year (about £42/month)
Postgraduate Loan deduction (6% above £21,000): £840/year (about £70/month)
Total combined deduction: £1,345/year (about £112/month)
This combined deduction can materially affect take-home pay calculations.
Salary Calculator
Model both student loan deductions simultaneously alongside tax and NI.
Related Calculators
Frequently Asked Questions
You repay 9% of everything you earn above your plan's threshold, or 6% on a Postgraduate Loan. On a £35,000 salary that is £729 a year on Plan 1, £505 on Plan 2, £108 on Plan 4, £900 on Plan 5 and £840 on a Postgraduate Loan. Nothing is taken on income below the threshold.
Repayment starts once you earn above your plan's threshold: £26,900 on Plan 1, £29,385 on Plan 2, £33,795 on Plan 4, £25,000 on Plan 5 and £21,000 on a Postgraduate Loan. Below the threshold, nothing is deducted.
It depends on the plan. Plan 1 is written off 25 years after the April you were first due to repay, or at age 65 for older loans. Plan 2, Plan 4 and the Postgraduate Loan are written off after 30 years, and Plan 5 after 40 years.
No. Repayments are only taken on income above your threshold, so if you earn under it nothing is deducted. If your income drops below the threshold during the year, repayments stop automatically through the payroll system and restart when you earn above it again.
If you have an undergraduate plan and a Postgraduate Loan, you repay both at the same time: 9% of income above your undergraduate threshold plus 6% of income above the £21,000 Postgraduate threshold. On a £35,000 salary with Plan 2 and a Postgraduate Loan that is £505 plus £840, so £1,345 a year.
If you are employed, repayments are taken automatically through PAYE, deducted from your pay before it reaches you and shown on your payslip. If you are self-employed, you pay through your Self Assessment tax return. You do not arrange payments yourself while employed.
For most people, no. Repayments stop when the loan is written off, and many never clear the balance first, so extra payments can be money you would never have repaid. With interest of 3.2% to 6.2%, early repayment usually only helps high earners who would clear the loan well before write-off. Check your balance and projected repayments first.
Plan 1, Plan 4 and Plan 5 charge 3.2%. The Postgraduate Loan charges 6.2%. Plan 2 is variable, 3.2% if you earn £29,385 or less, rising to 6.2% at £52,885 or more, and 6.2% while you are studying.
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James Hartley is a Chartered Management Accountant (CIMA) with more than eight years of experience in UK tax, payroll and compliance. He holds a BSc in Finance and Economics from the University of Manchester and spent his early career at a Big 4 accounting firm. He founded WhatsUK to build free UK financial calculators and guides verified against official HMRC sources. He authors every calculator and article on WhatsUK.
Sources & Official References
- GOV.UK- Repaying your student loan
- Student Loans Company- Repayment guidance
Last verified:
Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.