UK Student Loans Explained
A comprehensive guide to student loan repayment plans, thresholds, interest rates, and when your loan gets written off.
Student Loan Plans Overview
The UK has five different student loan plans, each with different repayment thresholds, interest rates, and write-off periods. Which plan you're on depends on when you started your course and where you studied.
| Plan | When You Started | Where You Studied | Threshold (2026-27) | Write-Off |
|---|---|---|---|---|
| Plan 1 | Before Sept 2012 | England, Wales, NI | £26,900/year | 25 years or age 65 |
| Plan 2 | Sept 2012 - July 2023 | England, Wales | £29,385/year | 30 years |
| Plan 4 | Any time | Scotland | £33,795/year | 30 years |
| Plan 5 | Aug 2023 onwards | England, Wales | £25,000/year | 40 years |
| Postgraduate | Aug 2016 onwards | England, Wales | £21,000/year | 30 years |
Repayment thresholds usually change on 6 April each year. For 2025/26 they were: Plan 1 £26,065; Plan 2 £28,470; Plan 4 £32,745; Plan 5 £25,000; postgraduate £21,000. Plan 5 repayments through PAYE began from 6 April 2026 for borrowers whose courses started in August 2023 or later.
Not Sure Which Plan You're On?
Check your latest payslip (it shows SL1, SL2, SL4, SL5, or PGL), or log in to your Student Loan Company account at gov.uk/student-loans.
How Repayments Work
Automatic PAYE Deductions
Student loan repayments are automatically deducted from your salary by your employer through PAYE (Pay As You Earn), just like income tax and National Insurance. You only repay when your income is above the threshold.
Repayment Rates
Undergraduate Loans (Plans 1, 2, 4, 5)
You repay 9% of income above the threshold
Postgraduate Loans
You repay 6% of income above the threshold
Key Point
You only repay on income above the threshold. For example, if you earn £30,000 on Plan 2 (2026-27 threshold £29,385), you only repay 9% of the £615 above the threshold, not 9% of your full salary.
Repayment Examples by Plan
Plan 2 (Most Common - Started 2012-2023)
| Annual Salary | Above Threshold (£29,385) | Monthly Repayment | Annual Repayment |
|---|---|---|---|
| £25,000 | £0 | £0 | £0 |
| £30,000 | £615 | £5 | £55 |
| £35,000 | £5,615 | £42 | £505 |
| £40,000 | £10,615 | £80 | £955 |
| £50,000 | £20,615 | £154 | £1,853 |
| £60,000 | £30,615 | £229 | £2,753 |
Calculation (2026-27 Plan 2 threshold): (Annual Salary - £29,385) × 9% ÷ 12 = Monthly repayment. Figures rounded to the nearest pound.
Plan 5 (Started Aug 2023 or Later)
| Annual Salary | Above Threshold (£25,000) | Monthly Repayment | Annual Repayment |
|---|---|---|---|
| £25,000 | £0 | £0 | £0 |
| £30,000 | £5,000 | £38 | £450 |
| £35,000 | £10,000 | £75 | £900 |
| £40,000 | £15,000 | £113 | £1,350 |
Threshold £25,000 for 2025/26 and 2026/27. First Plan 5 PAYE repayments apply from 6 April 2026.
Postgraduate Loan
| Annual Salary | Above Threshold (£21,000) | Monthly Repayment | Annual Repayment |
|---|---|---|---|
| £25,000 | £4,000 | £20 | £240 |
| £30,000 | £9,000 | £45 | £540 |
| £40,000 | £19,000 | £95 | £1,140 |
Note: 6% rate instead of 9%
Interest Rates by Plan
| Plan | While Studying | After Graduation | Illustrative rates (2026-27) |
|---|---|---|---|
| Plan 1 | RPI | RPI | 3.1% |
| Plan 2 | RPI + 3% | RPI to RPI+3% (income-based) | RPI to RPI+3% (max 6% cap) |
| Plan 4 | RPI | RPI | 3.1% |
| Plan 5 | RPI | RPI | 3.1% |
| Postgraduate | RPI + 3% | RPI + 3% | 6% cap |
Plan 2 Income-Based Interest
For Plan 2 loans after graduation, interest increases gradually from RPI (at the repayment threshold, £29,385 in 2026-27) to RPI+3% (at £52,885 or above in 2026-27). For academic year 2026/27, the maximum rate on Plan 2 and postgraduate loans is capped at 6%. Higher earners can therefore pay more interest on Plan 2 loans than lower earners.
What is RPI?
RPI (Retail Price Index) is a measure of inflation. Student loan interest rates are linked to RPI to reflect the changing cost of living. RPI is announced each March and applies from the following September.
When Your Loan Gets Written Off
Your student loan is automatically written off (cancelled) after a certain period, regardless of how much you still owe. Most people will never fully repay their loan – it will be written off first.
Plan 1
Example: Graduated in 2015, first repayment April 2016, loan written off April 2041 (or age 65)
Plan 2
Example: Graduated in 2022, first repayment April 2023, loan written off April 2053
Plan 4
Plan 5 (Important Change!)
Longer write-off period than previous plans. Started Aug 2023 onwards.
Postgraduate Loan
What This Means
If you borrowed £45,000 but only repaid £30,000 by the write-off date, the remaining £15,000 (plus interest) is completely cancelled. You don't owe it anymore. This is why Monthly repayments are often a more useful figure than the total balance shown on your statement.
Multiple Loans
If you have both an undergraduate and postgraduate loan, you'll make separate repayments for each. The repayments are calculated independently and add together in your payslip.
Example: Plan 2 + Postgraduate Loan
With multiple loans, you could be repaying up to 15% of income above £21,000 (9% undergraduate + 6% postgraduate). This only applies to income above the thresholds.
Should You Make Voluntary Repayments?
You can make extra voluntary repayments directly to the Student Loans Company. Whether that affects your total cost depends on your plan, income, and how much is likely to be written off.
Voluntary payments may not reduce write-off if:
- • Your loan will likely be written off before it's fully repaid
- • You're on Plan 1, 2, 4, or Postgraduate with average earnings
- • You have other debts with higher interest (credit cards, personal loans)
- • You could use the money for high-interest savings or ISAs
- • You could use it to build an emergency fund
Voluntary payments may matter more if:
- • You're a very high earner likely to repay the full amount
- • You're on Plan 2 with high interest (RPI+3%) and high salary
- • You're close to paying it off anyway (within 2-3 years)
- • You have no other debts and substantial savings
- • It causes you significant stress (peace of mind value)
The Maths
Average Plan 2 graduate with £45,000 debt earning £30,000 (2026-27 threshold):
- • Annual repayment: £55
- • Total over 30 years: about £1,650
- • Remaining balance written off: remainder plus interest
In this illustration, voluntary payments would reduce the balance but may not change what is written off at the end of the term.
Impact on Your Finances
Effect on Take-Home Pay
Student loan repayments appear on your payslip alongside tax and National Insurance. They reduce your take-home pay but are calculated after tax and NI.
Payslip Example (£35k Plan 2)
Mortgage Applications
Lenders do consider your student loan repayments when assessing affordability. However, they only count the actual monthly repayment (e.g. £42/month on Plan 2 at £35,000 in 2026-27), not the full debt amount.
Credit Score
Student loans do not appear on your credit report and don't affect your credit score. They're managed separately by the Student Loans Company.
Important Information
- • This is educational content only and does not constitute financial advice
- • Repayment thresholds change on 6 April each year; figures in this guide use 2026-27 where stated
- • Plan 5 PAYE repayments began from 6 April 2026; thresholds and interest rates can change with government announcements
- • Always check your Student Loans Company account for your specific details
- • If moving abroad, different repayment rules apply – notify SLC immediately
Further Resources
- GOV.UK - Repaying Your Student Loan
Official guidance on student loan repayment
- Student Loans Company - Check Your Balance
Log in to view your loan details and repayment history
- GOV.UK - Special Rules for Student Loans
Overseas repayment, self-employment, and other special cases
- MoneySavingExpert - Student Loans Repayment Guide
Comprehensive guide including overpayment calculator