Student Loan Repayment Guide 2025-2026
Complete guide to understanding student loan repayments in the UK. Learn about all student loan plans, thresholds, repayment rates, and what happens if you have multiple loans.
Student loan repayments can seem complex, especially with five different plan types now in operation. Unlike traditional loans, you only repay when you earn above a certain threshold, and any outstanding balance is written off after a set period. Understanding which plan you're on and how much you'll repay is crucial for financial planning.
This guide covers all five types of student loan currently in repayment: Plan 1, Plan 2, Plan 4, Plan 5, and Postgraduate Loans. We'll explain the thresholds, rates, and what happens in various scenarios including having multiple loans.
| Plan Type | Annual Threshold | Monthly Threshold | Repayment Rate | Write-Off Period |
|---|---|---|---|---|
| Plan 1 | £26,900 | £2241.67 | 9% | 25 years or age 65 |
| Plan 2 | £29,385 | £2448.75 | 9% | 30 years |
| Plan 4 | £33,210 | £2767.50 | 9% | 30 years |
| Plan 5 | £25,000 | £2083.33 | 9% | 40 years |
| Postgraduate | £21,000 | £1750.00 | 6% | 30 years |
Which Student Loan Plan Am I On?
Your student loan plan depends on when and where you started your course. Here's how to identify which plan you're on:
You're on Plan 1 if you:
- • Started your undergraduate course before September 2012 in England or Wales
- • Studied in Scotland or Northern Ireland and started before September 1998
- • Took out a loan for a course in Scotland or Northern Ireland at any time
- • Lowest threshold (£26,900)
- • Written off after 25 years or at age 65 (whichever comes first)
- • Interest rate: RPI or RPI + 1%, capped at 3.2%
You're on Plan 2 if you:
- • Started your undergraduate course between 1 September 2012 and 31 July 2023 in England or Wales
- • This is the most common plan for current working graduates
- • Threshold: £29,385
- • Written off after 30 years
- • Interest rate: RPI + up to 3%, capped at 3.2% (with max 6.2% above £52,885)
You're on Plan 4 if you:
- • Lived in Scotland when you started your course
- • Started your course on or after 1 September 1998
- • Received funding from the Student Awards Agency Scotland (SAAS)
- • Highest threshold (£33,210)
- • Written off after 30 years
- • Interest rate: RPI or RPI + 1%, capped at 3.2%
- • Generally more favorable than Plan 2
You're on Plan 5 if you:
- • Started your undergraduate course on or after 1 August 2023 in England
- • This is the newest plan type
- • Lower threshold than Plan 2 (£25,000)
- • Written off after 40 years (longest period)
- • Interest rate: RPI only, capped at 6%
- • Higher repayments but lower interest
You have a Postgraduate Loan if you:
- • Took out a loan for a master's degree (up to £12,167 for courses starting 2024-2025)
- • Took out a loan for a doctoral degree (up to £28,673 for courses starting 2024-2025)
- • This is in addition to any undergraduate loan
- • Lowest threshold (£21,000)
- • Lower repayment rate (6% vs 9%)
- • Written off after 30 years
- • Interest rate: RPI + 3%, capped at 3.2%
- • Repaid simultaneously with undergraduate loan
How Student Loan Repayments Work
Student loan repayments are calculated as a percentage of your income above the threshold. If you're employed, they're deducted automatically through PAYE (Pay As You Earn) alongside tax and National Insurance. If you're self-employed, you pay through self-assessment.
Example 1: Plan 2, £35,000 Salary
Plan 2 threshold: £29,385
Income above threshold: £5,615
Annual repayment: £5,615 × 9% = £505.35
Example 2: Plan 4, £40,000 Salary
Plan 4 threshold: £33,210
Income above threshold: £6,790
Annual repayment: £6,790 × 9% = £611.10
Important Points About Repayments
- ✓No repayment below threshold: If you earn less than your plan's threshold in any month, you pay nothing that month
- ✓Automatic deductions: Your employer deducts repayments automatically if you're on PAYE
- ✓Based on gross income: Repayments are calculated before tax, on your total salary including bonuses
- ✓No penalty for early repayment: You can make voluntary repayments at any time with no penalty
- ✓Written off eventually: Any remaining balance is written off after the write-off period
Having Multiple Student Loans
If you have both an undergraduate loan and a postgraduate loan, you repay both simultaneously. Each loan has its own threshold and rate, so you could be repaying 9% (undergraduate) + 6% (postgraduate) = 15% total on certain portions of your income.
The key thing to understand is that each loan is calculated independently:
- • Your undergraduate loan (Plan 1, 2, 4, or 5) is 9% of income above its threshold
- • Your postgraduate loan is 6% of income above £21,000
- • You pay both percentages on the overlapping portion of income
- • £0 - £21,000: No repayment
- • £21,000 - £29,385: 6% (postgraduate only)
- • Above £29,385: 15% (9% + 6%)
Example: Plan 2 + Postgraduate, £50,000 Salary
Income above £21,000: £29,000
Repayment: £29,000 × 6% = £1740.00/year (£145.00/month)
Income above £29,385: £20,615
Repayment: £20,615 × 9% = £1855.35/year (£154.61/month)
Total monthly repayment: £299.61
This is 7.2% of gross salary
The Combined Impact
With multiple loans at higher salaries, student loan repayments can become a significant deduction:
| Salary | Plan 2 Only | Postgrad Only | Both Loans | % of Salary |
|---|---|---|---|---|
| £30,000 | £55 | £540 | £595 | 2.0% |
| £50,000 | £1855 | £1740 | £3595 | 7.2% |
| £70,000 | £3655 | £2940 | £6595 | 9.4% |
Your Total Marginal Deduction Rate
When you combine income tax, National Insurance, and student loans, your marginal deduction rate (the percentage taken from each extra pound you earn) can be surprisingly high. Understanding this helps with decisions about overtime, pay rises, or side income.
| Income Level | Income Tax | National Insurance | Student Loans | Total Deduction | You Keep |
|---|---|---|---|---|---|
| Below £21,000 | 0-20% | 0-8% | 0% | 0-28% | 72-100% |
| £21,000-£29,385 | 20% | 8% | 6% | 34% | 66% |
| £29,385-£50,270 | 20% | 8% | 15% | 43% | 57% |
| £50,270-£100,000 | 40% | 2% | 15% | 57% | 43% |
| £100,000-£125,140 | 60% | 2% | 15% | 77% | 23% |
| Above £125,140 | 45% | 2% | 15% | 62% | 38% |
Note: The 77% rate between £100k-£125k is due to the personal allowance taper. This is the highest marginal rate in the UK tax system.
Should I Pay Off My Student Loan Early?
Whether to make voluntary early repayments depends on your plan type, income trajectory, and personal circumstances. Here are the key considerations:
General Rule of Thumb
- Plan 1: Consider paying off early if balance is low or you're a high earner
- Plan 2: Only pay early if you're earning £50k+ and expect significant income growth
- Plan 4: Similar to Plan 1, but higher threshold means less urgency
- Plan 5: Very unlikely to benefit from early repayment for most graduates
- Postgraduate: Consider if earning £40k+ with good career prospects
Calculate Your Student Loan Repayments
Use our free salary calculator to see exactly how much you'll repay on your student loan(s) for 2025-2026, along with income tax, National Insurance, and pension deductions.
Calculate Your Take-Home PayFrequently Asked Questions
You still have to repay your student loan if you move abroad. You need to inform the Student Loans Company and will make repayments based on the local threshold for the country you're living in (not the UK threshold). Repayments are typically 9% of income above the local threshold, paid directly to SLC rather than through PAYE.
No. Student loans don't appear on your credit report and don't affect your credit score. However, the monthly repayments are considered in mortgage affordability calculations, as they reduce your disposable income.
Student loan repayments are income-contingent, so if your income falls below the threshold, you automatically stop paying. There's no penalty for this. If you're unemployed or earning below the threshold, you simply don't make repayments during that time. You can't default on a student loan in the traditional sense.
Yes, student loans are written off after a certain period: Plan 1 after 25 years or at age 65 (whichever is first), Plan 2 and Plan 4 after 30 years, Plan 5 after 40 years, and Postgraduate after 30 years. Any outstanding balance is cancelled, regardless of how much you've repaid. Most Plan 2 and Plan 5 graduates will not repay their loans in full before write-off.
No, you can't choose or switch your plan. Your plan is determined by when and where you started your course. The only exception is if you have both an undergraduate and postgraduate loan, in which case you'll be on multiple plans simultaneously.