UK Student Loan Repayment Guide (2026/27)
Student loan repayments confuse a lot of people because there isn't one system — there are five, and which one applies to you depends entirely on where and when you studied. This guide covers every plan type, how repayments are actually calculated, and what happens to unpaid balances over time.
Model your own repayments alongside tax and National Insurance with the UK Take-Home Pay Calculator. For other rates, see the Personal Finance Wiki.
Contents
Which plan am I on?
| If you... | You're likely on |
|---|---|
| Started an undergraduate course in England or Wales before September 2012 | Plan 1 |
| Started an undergraduate course in Northern Ireland (any year) | Plan 1 |
| Started an undergraduate course in England or Wales between 2012 and August 2023 | Plan 2 |
| Are a Scottish student (any year, via SAAS) | Plan 4 |
| Started an undergraduate course in England from August 2023 onward | Plan 5 |
| Took out a Postgraduate Master's or Doctoral Loan | Postgraduate Loan (on top of any undergraduate plan) |
If you're not sure, your plan type is shown on the Student Loans Company (SLC) online account, or on the P60/payslip in some cases. Getting it wrong matters — employers deduct at the threshold and rate for whichever plan you (or a starter checklist) tell them, so an incorrect plan can mean over- or under-paying.
2026/27 thresholds and rates
| Plan | Annual threshold | Monthly threshold | Repayment rate |
|---|---|---|---|
| Plan 1 | £26,900 | £2,242 | 9% |
| Plan 2 | £29,385 | £2,449 | 9% |
| Plan 4 (Scotland) | £33,795 | £2,816 | 9% |
| Plan 5 | £25,000 | £2,083 | 9% |
| Postgraduate Loan | £21,000 | £1,750 | 6% |
Thresholds rose for every plan except Plan 5 and the Postgraduate Loan, which stayed at their prior levels. You repay 9% (6% for Postgraduate Loans) of income above the threshold only — not on your whole salary, and not at all if you earn under the threshold.
How repayments are calculated
Like Income Tax, this is deducted automatically through PAYE by your employer, based on each pay period rather than a single annual figure:
- Take your gross pay for the period (weekly/monthly).
- Subtract the period threshold (annual threshold ÷ 12, or ÷ 52).
- If the result is positive, multiply by 9% (or 6% for Postgraduate Loans).
- That amount is deducted that payday.
Because it's calculated per pay period rather than cumulatively across the year in the same way Income Tax is, repayments can vary month to month if your pay is irregular — for example, a bonus month will trigger a larger repayment that period, even if your annual income wouldn't otherwise change your average.
Worked examples
£32,000 salary, Plan 2:
- Annual threshold: £29,385
- Income above threshold: £32,000 − £29,385 = £2,615
- Repayment: £2,615 × 9% = £235.35/year (≈£19.61/month)
£32,000 salary, Plan 5:
- Annual threshold: £25,000
- Income above threshold: £32,000 − £25,000 = £7,000
- Repayment: £7,000 × 9% = £630/year (≈£52.50/month)
Note the difference — Plan 5's lower threshold means meaningfully higher repayments than Plan 2 at the same salary, even though the rate (9%) is identical. This is a deliberate policy design: Plan 5 (introduced for courses starting September 2023 onward) also extends the write-off period to 40 years, discussed below.
£40,000 salary, Plan 1:
- Annual threshold: £26,900
- Income above threshold: £40,000 − £26,900 = £13,100
- Repayment: £13,100 × 9% = £1,179/year (≈£98.25/month)
Interest rates
Interest accrues on the outstanding balance from the day it's borrowed, and continues even after you graduate, at a rate that varies by plan:
- Plan 1: the lower of RPI or the Bank of England base rate + 1%.
- Plan 2: varies with income, between RPI and RPI + 3%, on a sliding scale up to a set income threshold.
- Plan 4: RPI only.
- Plan 5: RPI only.
- Postgraduate Loan: RPI + 3%.
Because interest applies throughout, and many graduates never fully repay before their loan is written off, student loans function more like a graduate tax on income above the threshold than a conventional debt for most borrowers — the total interest accrued rarely matters if the balance is written off first.
Postgraduate Loans alongside an undergraduate plan
If you have both a Postgraduate Loan and an undergraduate plan (e.g. Plan 2 + Postgraduate Loan), both are deducted simultaneously and independently — each against its own threshold:
- Undergraduate plan: 9% of income above its threshold.
- Postgraduate Loan: 6% of income above £21,000.
This can mean repaying 15% combined on the portion of income above both thresholds — a common surprise for postgraduate-qualified professionals in their late twenties and thirties.
When does the loan get written off?
| Plan | Written off after |
|---|---|
| Plan 1 | 25 years after the April you were first due to repay, or age 65 for older loans |
| Plan 2 | 30 years after the April you were first due to repay |
| Plan 4 | 30 years after the April you were first due to repay |
| Plan 5 | 40 years after the April you were first due to repay |
| Postgraduate Loan | Matches the write-off term of the undergraduate plan it's taken alongside (25/30/40 years) |
Because most borrowers never clear the full balance (especially on Plan 2 and Plan 5, given the extended terms and interest), the loan effectively behaves as a time-limited additional tax on earnings above the threshold, rather than a debt most people pay off outright.
Overpaying and voluntary repayments
You can make voluntary extra repayments directly to the Student Loans Company at any time. For most borrowers on Plan 2, Plan 4 or Plan 5 — given the long write-off terms and income-linked repayments — overpaying rarely makes financial sense unless you're confident you'll clear the full balance well before write-off, since anything unpaid at write-off is cancelled regardless of how much interest accrued. It's more likely to be worthwhile for Plan 1 borrowers close to full repayment, where the remaining balance and interest are more predictable.
FAQ
Do I repay my student loan if I'm unemployed?
No — repayments are based on income above the threshold. If you earn nothing (or below the threshold), no repayment is due that period, though interest continues to accrue on the balance.
Does my student loan affect my credit score?
No. Student loans don't appear on standard credit reports and aren't factored into most credit scoring in the UK, though very large lenders may ask about them directly for affordability checks (e.g. mortgage applications).
Can I switch from Plan 2 to Plan 5?
No — your plan type is fixed by when and where you started your course, not by choice.
What happens to my student loan if I move abroad?
You're still liable to repay, but the process changes — you'll repay directly to the Student Loans Company based on an income-equivalent threshold for your country of residence, rather than through UK PAYE.
Is a Postgraduate Loan the same as Plan 2?
No — it's a separate loan with its own threshold (£21,000) and rate (6%), which runs alongside any undergraduate plan you also have rather than replacing it.
More guides
This page is for general information only and does not constitute financial advice. Figures are correct for the 2026/27 tax year — check gov.uk for your specific plan and circumstances.