Student loan repayments are deducted automatically from your salary once your earnings exceed a plan-specific threshold. The amount you repay each month depends on which plan you are on and how much you earn above that threshold — not on the total balance you owe. For many graduates, student loan deductions represent a significant chunk of their monthly payslip deductions, sitting alongside income tax and National Insurance. This guide explains each repayment plan for the 2026/27 tax year, the current thresholds, how the maths works, and when your loan is eventually written off.[1]
Which student loan plan am I on?
Your repayment plan depends on when and where you took out the loan. You cannot choose your plan — it is determined by the rules that applied when you started your course. If you are unsure, check your Student Loans Company (SLC) online account or look at your payslip, which shows the plan type next to the deduction amount.
- Plan 1 — undergraduate courses in England or Wales that started before 1 September 2012, or any undergraduate course in Northern Ireland regardless of start date.
- Plan 2 — undergraduate courses in England or Wales that started on or after 1 September 2012. This is the most common plan for recent graduates.
- Plan 4 — undergraduate or postgraduate loans from the Student Awards Agency for Scotland (SAAS). This replaced the old Plan 1 Scottish loans in April 2021.
- Plan 5 — undergraduate courses in England or Wales that started on or after 1 August 2023. This plan has a lower threshold but a longer write-off period.
- Postgraduate Loan — Master's or Doctoral Loans taken out in England or Wales. This is repaid concurrently with any undergraduate plan at a lower rate.
What are the repayment thresholds for 2026/27?
You only repay when your gross income exceeds the threshold for your plan. The repayment is calculated as a percentage of everything you earn above that threshold — not your total salary. If your income drops below the threshold (for example, between jobs), repayments stop automatically. These thresholds are reviewed annually and usually increase with inflation.
| Plan | Annual Threshold | Monthly Threshold | Rate |
|---|---|---|---|
| Plan 1 | £26,900 | £2,242 | 9% |
| Plan 2 | £29,385 | £2,449 | 9% |
| Plan 4 | £33,795 | £2,816 | 9% |
| Plan 5 | £25,000 | £2,083 | 9% |
| Postgraduate Loan | £21,000 | £1,750 | 6% |
How is my student loan repayment calculated?
The repayment is a percentage of your earnings above the threshold — not your total salary. Like National Insurance, the calculation is done on a pay-period basis: each month your employer compares your gross pay to the monthly threshold and deducts the percentage on any excess. If your pay fluctuates month to month, so do your repayments.
For example, on Plan 2 with a £35,000 salary:
- Income above threshold: £35,000 − £29,385 = £5,615
- Annual repayment: £5,615 × 9% = £505
- Monthly deduction: approximately £42
See the exact figure for your salary using our calculator with Plan 2 configured at £35,000. The calculator shows your student loan deduction alongside income tax and NI so you can see the full picture of your take-home pay.
Can I have two student loans repaying at once?
Yes. If you have both an undergraduate loan (Plan 1, 2, 4, or 5) and a Postgraduate Loan, you repay both simultaneously. Each loan is assessed independently against its own threshold. The two deductions are separate lines on your payslip. This can be a significant drain on take-home pay, especially for early-career professionals whose salaries sit just above both thresholds.
For example, on a £40,000 salary with Plan 2 and a Postgraduate Loan:
- Plan 2: (£40,000 − £29,385) × 9% = £955/year
- Postgraduate: (£40,000 − £21,000) × 6% = £1,140/year
- Total student loan deductions: £2,095/year (£175/month)
See this breakdown in full using our calculator with Plan 2 + Postgraduate Loan at £40,000.
When do repayments start?
Repayments begin in the April after you leave your course (or the April after the course would have ended if you leave early). They do not start while you are still studying full-time, even if you have part-time employment. Once you leave, your employer begins deducting repayments through PAYE if your salary is above the threshold. If you are self-employed, you repay through your Self-Assessment tax return instead.
If your income drops below the threshold at any point — for example due to a career break, redundancy, or reduced hours — repayments stop automatically. There is no minimum payment and no penalty for earning below the threshold. The loan simply waits until your income recovers.
When is my student loan written off?
Repayments end when either you have repaid the loan in full, or the loan is written off — whichever comes first. The write-off period depends on your plan and is measured from the April you were first due to repay (not the date you graduated):
- Plan 1 — written off when you turn 65 (loans taken before 2006) or 25 years after first due to repay (loans from 2006 onwards).
- Plan 2 — written off 30 years after first due to repay.
- Plan 4 — written off 30 years after first due to repay (loans from 2007 onwards), or when you turn 65 (older loans).
- Plan 5 — written off 40 years after first due to repay. This is significantly longer than Plan 2.
- Postgraduate Loan — written off 30 years after first due to repay.
The written-off amount is not treated as income and does not trigger a tax charge. Many Plan 2 and Plan 5 borrowers will have their loans written off before they fully repay — the Office for Budget Responsibility estimates that around 70% of Plan 2 borrowers will never fully repay their loan.
Should I repay my student loan early?
Whether voluntary repayment makes financial sense depends on your balance, interest rate, earnings trajectory, and how close you are to write-off. The key question is: will you repay the loan in full through normal deductions before it is written off? If not, any voluntary overpayment is money you would never have been required to pay — effectively a donation to the Treasury.
- Plan 1 and Plan 4 — these carry lower interest (RPI only, capped at the prevailing rate). Higher earners on these plans often will repay in full, making overpayment worthwhile as it saves interest. But check your projected repayment date first.
- Plan 2 — charges up to RPI + 3% while the balance grows, but most borrowers will have the remainder written off. Unless your salary is consistently above £50,000 and you have a relatively small balance, overpaying often makes no difference to your lifetime costs.
- Plan 5 — with a 40-year write-off and RPI + 3% interest, voluntary repayment is unwise for the vast majority of borrowers. The threshold is lower but the term is much longer.
For a deeper analysis, see our student loan early repayment guide which includes break-even calculations for each plan.
How do student loans affect salary sacrifice?
Salary sacrifice pension contributions reduce your gross pay for student loan purposes. If you sacrifice £200 per month, your student loan repayment is calculated on the lower post-sacrifice figure. This means salary sacrifice gives a triple benefit for graduates: it saves income tax, National Insurance, and reduces student loan deductions. The maths is straightforward — every pound sacrificed below the threshold eliminates 9p of student loan repayment alongside the tax and NI savings.
However, this only helps if you would have repaid the loan in full anyway. If your loan will be written off regardless, reducing repayments via sacrifice just means more is written off later — the total you repay over your lifetime is unchanged. This nuance is important for financial planning. See our salary sacrifice guide for the full picture.
Sources
- GOV.UK — Repaying your student loan. Accessed July 2026.