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UK student loan repayment explained

How student loan repayments are calculated, which plan you're on, and how much comes off your payslip each month.

Last updated: April 2025 · Based on HMRC 2026/27 rates

How student loan repayment works

Unlike most loans, student loan repayments in the UK are income-contingent — you only repay when your income exceeds a set threshold, and the amount you repay is a fixed percentage of what you earn above that threshold. You never repay based on your total loan balance.

If you are employed, repayments are deducted automatically through PAYE — they appear on your payslip alongside income tax and National Insurance.

Which plan are you on?

PlanWho it applies to2026/27 thresholdRate
Plan 1Started university before August 2012 (England/Wales) or any time in Northern Ireland£26,900/yr9%
Plan 2Started university August 2012 – July 2023 in England/Wales£29,385/yr9%
Plan 4Scottish student loans£33,795/yr9%
Plan 5Started university from August 2023 in England£25,000/yr9%
Not sure which plan you're on? Check your original student finance correspondence, your payslip (it shows "Plan 1" or "Plan 2" etc.), or log in to the Student Loans Company portal at slc.co.uk.

Worked example: Plan 2, £32,000 salary

Example — Plan 2, gross salary £32,000
Annual salary£32,000
Plan 2 threshold£29,385
Income above threshold£2,615
Annual repayment (9%)£235
Monthly deduction£20

Worked example: Plan 2, £55,000 salary

Example — Plan 2, gross salary £55,000
Annual salary£55,000
Plan 2 threshold£29,385
Income above threshold£25,615
Annual repayment (9%)£2,305
Monthly deduction£192

When does the loan get written off?

Your student loan is written off after a set number of years regardless of the remaining balance — this is one of the key differences from a commercial loan.

  • Plan 1: 25 years after the April you were first due to repay
  • 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
For many Plan 2 borrowers — particularly those with lower or average incomes — the loan will never be fully repaid before write-off. In this scenario, thinking of it as an additional income tax rather than a debt to clear is more accurate.

Should you make voluntary overpayments?

This depends on your plan and projected lifetime earnings. For most Plan 2 borrowers, voluntary overpayments are not recommended because:

  • If you were going to have the loan written off anyway, overpaying means you paid money you did not need to.
  • The interest rate on the loan is linked to RPI, but for many borrowers the write-off value outweighs the interest cost over 30 years.

Plan 1 borrowers with a smaller remaining balance and higher earnings may benefit from overpaying to clear the loan before interest accumulates significantly. Always model both scenarios before deciding.

Does student loan repayment affect your mortgage application?

Yes — mortgage lenders assess affordability based on your net disposable income. Student loan repayments reduce this, so they are factored into mortgage calculations. However, the impact is usually modest (£100–250/month) and most lenders account for it the same way as any regular outgoing.

Postgraduate loans

Postgraduate loans (PGL) are repaid separately to undergraduate loans. The repayment threshold is £21,000/year, with a 6% repayment rate on income above this. Both undergraduate and postgraduate deductions can be active at the same time.

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