Student loan repayments in the UK work differently to most debt. You only repay what you earn above a fixed threshold, repayments stop automatically if your income drops, and the loan is written off after a set number of years regardless of what you still owe. For many borrowers, the loan functions more like a graduate income tax than a conventional debt.
In 2026/27, there are five student loan plans plus a Postgraduate Loan — each with different thresholds, repayment rates, interest charges, and write-off timelines. Knowing which plan you are on is essential for calculating your actual take-home pay.
The Five Plan Types: Key Differences
| Plan | Who it applies to | Repayment threshold 2026/27 | Rate | Write-off |
|---|---|---|---|---|
| Plan 1 | England/Wales pre-Sept 2012 starters; Northern Ireland | £24,990 | 9% above threshold | Age 65 or 25 years |
| Plan 2 | England/Wales Sept 2012–July 2023 starters | £27,295 | 9% above threshold | 30 years from start |
| Plan 4 | Scotland (all years) | £31,395 | 9% above threshold | Age 65 or 30 years |
| Plan 5 | England Aug 2023 onwards | £25,000 | 9% above threshold | 40 years from start |
| Postgraduate | Masters or Doctoral loan | £21,000 | 6% above threshold | 30 years from start |
Plans 1 and 2 repayment runs concurrently if you took an undergraduate Plan 1 loan then a postgraduate Plan 2 — you repay 9% on both simultaneously once above the relevant threshold.
What You Actually Repay at Common Salaries
The table below shows annual student loan repayments at various salaries for Plans 1, 2, and 5 in 2026/27:
| Salary | Plan 1 (threshold £24,990) | Plan 2 (threshold £27,295) | Plan 5 (threshold £25,000) |
|---|---|---|---|
| £25,000 | £9/year | £0 | £0 |
| £27,000 | £181/year | £0 | £180/year |
| £30,000 | £451/year | £243/year | £450/year |
| £35,000 | £901/year | £693/year | £900/year |
| £40,000 | £1,351/year | £1,143/year | £1,350/year |
| £50,000 | £2,251/year | £2,043/year | £2,250/year |
| £60,000 | £3,151/year | £2,943/year | £3,150/year |
Note: If you have a Postgraduate Loan alongside an undergraduate plan, add 6% of income above £21,000 on top.
How Student Loan Repayments Are Collected
Via PAYE (most employees)
If you are employed, your employer deducts student loan repayments from your gross pay each month alongside income tax and National Insurance. You do not need to do anything — the deductions are automatic once HMRC tells your employer which plan you are on (usually when you submit your tax code details).
HMRC uses your cumulative earnings across the tax year to calculate repayments, so if you start a job part-way through the year, the threshold is applied pro-rata to ensure fairness.
Via Self Assessment (self-employed)
If you are self-employed, student loan repayments are calculated as part of your annual Self Assessment tax return and paid alongside your income tax and National Insurance bill. Because this is annual rather than monthly, you need to set aside money during the year to avoid a large bill in January.
When repayments stop
Repayments stop automatically if your earnings fall below the threshold. If you have been overcharged — for example, because your salary dropped mid-year — the Student Loans Company refunds the overpayment, usually after the end of the tax year.
Interest Rates on Each Plan
Interest rates significantly affect the total amount you owe but have no impact on your monthly repayments (which are solely based on income above the threshold). However, interest does affect whether you will repay the full balance before write-off.
- Plan 1: Charged at the lower of Bank of England base rate plus 1%, or RPI — capped at 5% in recent years
- Plan 2: RPI plus up to 3% while studying, tapering to RPI for income below £27,295 and up to RPI plus 3% for income above £49,130 — the variable element based on earnings makes Plan 2 interest complex to predict
- Plan 4: Same as Plan 1 — lower of base rate plus 1% or RPI
- Plan 5: RPI only (no variable element above RPI — a genuine improvement over Plan 2)
- Postgraduate Loan: RPI plus 3% while studying and throughout repayment
Should You Overpay Your Student Loan?
For most borrowers on Plan 2 or Plan 5, voluntary overpayments are rarely the right financial decision. Here is why:
If you are likely to not repay the full balance before write-off (which applies to an estimated 75% of Plan 2 borrowers, and likely more for Plan 5 given the longer 40-year term), overpaying simply reduces the amount eventually written off. You save no money — you just pay more in total.
Overpaying does make sense if:
- You have a small balance remaining and are very likely to clear it before write-off
- Your income is consistently high enough that you would repay the full balance anyway
- Your interest rate exceeds what you can earn on savings (less relevant for Plan 5’s RPI-only rate)
If unsure, check your balance at the Student Loans Company portal and use a repayment projection tool before making voluntary payments. Most financial advisers recommend investing spare money in a pension or ISA before overpaying a student loan.
Write-Off: What Happens at the End
When your loan reaches the write-off date, any remaining balance is cancelled and you stop repaying — regardless of how much you still owe. There is no credit impact, no income tax due, and no action required from you.
You should receive a letter from the Student Loans Company confirming the write-off.
Important: If you were born after a certain date or graduated after a specific year, your write-off date may differ. Check your specific situation via the Student Loans Company or your online account.
Articles in This Cluster
- Student Loan Repayment Calculator UK 2026 — enter your salary and plan to see monthly and annual repayments across all plans
- Student Loan Repayment Calculator Guide — how the calculator works, which plan to choose, and real-world examples
- Student Loan Repayment Thresholds 2026/27 — all thresholds confirmed with comparison across plan types
- When Is My Student Loan Written Off? — write-off dates by plan type with worked examples by graduation year
Related Hubs
- Take-Home Pay Hub — how student loan deductions affect your net pay at any salary
- Income Tax Hub — PAYE income tax alongside your student loan repayments
- Self Assessment Hub — filing self-employed student loan repayments via HMRC