How student loan repayments are worked out
Student loan repayments depend on your income, not on how much you owe. You repay a fixed percentage of whatever you earn above your plan's threshold, and nothing if you earn less. If you are employed, your employer takes the repayment through payroll alongside tax and National Insurance. If you file a Self Assessment return, HMRC works out the repayment on your total income for the year and deducts anything already taken from your salary.
Repayment thresholds for 2026/27
| Plan | Who is on it | Yearly threshold | Rate |
|---|---|---|---|
| Plan 1 | England and Wales courses started before 1 September 2012; Northern Ireland | £26,900 | 9% |
| Plan 2 | England courses started 1 September 2012 to 31 July 2023; Wales from 1 September 2012 | £29,385 | 9% |
| Plan 4 | Student Awards Agency Scotland | £33,795 | 9% |
| Plan 5 | England courses started on or after 1 August 2023 | £25,000 | 9% |
| Postgraduate Loan | Master's and Doctoral Loans from England and Wales | £21,000 | 6% |
Employers use monthly and weekly versions of each threshold: for example £2,241.66 a month for Plan 1 and £2,448.75 a month for Plan 2. Each payroll deduction is rounded down to the whole pound. Because the test is applied every payday, a bonus or overtime month can trigger a deduction even if your annual pay is below the threshold. You can ask for a refund after the tax year if your income for the whole year was under it.
The income used is your gross pay before tax, the same figure your employer uses for employer National Insurance. Pension contributions taken under a net pay arrangement do not reduce it, but salary sacrifice does.
If you have more than one loan
- Two or more undergraduate plans. You make one repayment of 9% of your income above the lowest of your thresholds. The Student Loans Company then splits it: the plan with the lowest threshold takes at most 9% of the gap between the two thresholds, and the rest goes to the other plan;
- A Postgraduate Loan with an undergraduate plan. You repay both at the same time: 6% above £21,000 for the Postgraduate Loan and 9% above your undergraduate threshold.
GOV.UK's own example: someone on Plan 1 and Plan 2 paid £3,200 a month repays £86. Of that, £18 goes to Plan 1, because 9% of the £207 gap between the monthly thresholds is £18.63, rounded down. The remaining £68 goes to Plan 2.
Worked example
A graduate on Plan 2 with a Postgraduate Loan earns £40,000 a year, paid monthly:
- Plan 2. 9% of £10,615 (£40,000 less £29,385) = £955.35 a year, or £79 a month through payroll;
- Postgraduate Loan. 6% of £19,000 (£40,000 less £21,000) = £1,140 a year, or £94 a month (6% of the £1,583.33 by which monthly pay of £3,333.33 exceeds £1,750 is £94.99, rounded down);
- Total. £2,095.35 a year, or £173 a month.
Interest and write-off
From 1 September 2026, Plans 1, 4 and 5 are charged 4.1% interest. Plan 2 interest depends on income: 4.1% at or below £29,385, rising on a sliding scale towards RPI plus 3% at £52,885, but capped at 6% until 31 August 2027. On £40,000, for example, Plan 2 interest is about 5.46%. Postgraduate Loans are also capped at 6%. Interest is added every month, whether or not you are earning enough to repay.
Any balance left is written off at the end of the term, counted from the April you were first due to repay:
| Plan | Written off |
|---|---|
| Plan 1 (first loan paid from 1 September 2006) | 25 years |
| Plan 2 | 30 years |
| Plan 4 (first loan paid from 1 August 2007) | 30 years |
| Plan 5 | 40 years |
| Postgraduate Loan (England and Wales) | 30 years |
Older Plan 1 loans are written off at age 65, and older Plan 4 loans at 65 or after 30 years, whichever comes first. The optional estimate in the calculator projects your balance month by month using today's interest rate and threshold and the pay rise you enter. Real thresholds and rates change every year, so treat it as a guide to whether you are likely to clear the loan, not as a forecast. GOV.UK points out that extra voluntary repayments may not benefit you if the loan would be written off anyway.
What this calculator does not cover
- Self Assessment income. Repayments on self-employment, rental or investment income are worked out on total annual income through your tax return;
- Borrowers abroad. Overseas thresholds differ by country and are set by the Student Loans Company;
- Several jobs. Each employer only looks at the pay it gives you, so you may repay less through payroll than on your combined income;
- More than one loan in the estimate. The payoff projection handles one plan at a time;
- Older loans. Plan 1 and Plan 4 loans written off at age 65 are not modelled.
Getting it right
If your employer has you on the wrong plan you can overpay, and the refund has to be claimed from the Student Loans Company. If you are self-employed or have other income, your repayment is settled through Self Assessment, and our Self Assessment service can prepare the return and check the figure. To see repayments alongside tax and National Insurance, use our income tax calculator.