First pay · 5 min read
How do student loan repayments work?
How UK student loan repayments work in 2026/27: thresholds for Plans 1, 2, 4 and 5 and postgraduate loans, 9% above the line, interest and write-off.
The short answer
You repay 9% of whatever you earn above your plan's threshold, taken from your pay by your employer like tax, and nothing when you're below it. For Plan 5, which covers English students who started from September 2023, the threshold is £25,000 and the loan is written off 40 years after you start repaying. Plan 2, for English and Welsh students who started between 2012 and 2022, has a threshold of £29,385 from April 2026 and a 30-year write-off. Postgraduate loans take 6% above £21,000. Interest changes what you owe on paper, but for most people the 9% and the write-off date decide what they actually pay.
Key takeaways
- Repayments are a percentage of income above a threshold, not a fixed monthly amount. Earn less, pay less; earn nothing, pay nothing.
- Plan 5: 9% above £25,000, interest at RPI, written off after 40 years. Plan 2: 9% above £29,385, interest up to RPI plus 3%, written off after 30 years.
- An undergraduate and a postgraduate loan are repaid at the same time: 9% plus 6% above the respective thresholds.
- Most Plan 2 and Plan 5 borrowers never repay in full, so overpaying is usually a gift to the Treasury. Check your own case before you do it.
On this pageThe plans side by side
The plans side by side
| Plan | Who | Threshold | Rate | Written off |
|---|---|---|---|---|
| Plan 1 | England and Wales before 2012; Northern Ireland | £27,660 | 9% | 25 years, or age 65 for the earliest loans |
| Plan 2 | England and Wales 2012 to 2022 | £29,385 | 9% | 30 years after the April you were due to start repaying |
| Plan 4 | Scotland | £33,035 | 9% | 30 years |
| Plan 5 | England from September 2023 | £25,000 | 9% | 40 years |
| Postgraduate | Master's and doctoral loans, England and Wales | £21,000 | 6% | 30 years |
Why it behaves like a tax, not a debt
A bank loan has a balance you must clear. A student loan has a balance, but what you pay is set by your income and what's left is cancelled at the write-off date. Two Plan 5 graduates owing £45,000 and £60,000 who earn the same salary pay the same each month for forty years, and both have the remainder written off. The balance only matters to the minority who earn enough to clear it. For everyone else, the real cost is 9% of income above the threshold for 30 or 40 years.
Interest, and why it worries people more than it should
Plan 5 interest is set at RPI, so the balance keeps pace with prices and no more. Plan 2 interest rises from RPI to RPI plus 3% as income rises, which is why Plan 2 balances grow alarmingly on paper. But if you won't clear the balance before the write-off date, the interest rate changes nothing about what you pay. The question to ask is not "how much do I owe" but "will I ever earn enough to repay it all". For most graduates on Plan 2 and Plan 5, the answer is no.
Should you overpay?
- Probably not if you're on Plan 2 or Plan 5 and expect a typical graduate career. You'd be paying off money that was going to be written off.
- Possibly, if you're a high earner early, such as a lawyer or banker, who will clear the balance anyway; then paying early saves interest.
- Plan 1 borrowers with small balances and low interest can sometimes clear it cheaply, but a savings account may still pay more.
- Never at the expense of pension contributions your employer matches, or an emergency fund.
Illustrative example: the £50,000 that cost £37 a month
A Plan 5 graduate leaves university owing £48,000 and starts on £30,000. Her payslip shows £37 a month going to the Student Loans Company. At £40,000 it's £112 a month; at £50,000 it's £187. She never clears the balance and it's written off when she's 62. Over forty years she pays a few tens of thousands, less than the headline, and the balance figure on her annual statement never changed what left her account.
Questions people ask
- How much do I repay on £30,000 a year?
- On Plan 5, 9% of £5,000, which is £450 a year or about £37 a month. On Plan 2, 9% of the £615 above £29,385, which is about £55 a year or under £5 a month. On Plan 1, 9% above £27,660, about £17 a month. If you also have a postgraduate loan, add 6% of the £9,000 above £21,000, another £45 a month.
- Which student loan plan am I on?
- Plan 1 if you started before 2012 in England or Wales, or any time in Northern Ireland. Plan 2 if you started in England or Wales between 2012 and 2022. Plan 4 if you're a Scottish student. Plan 5 if you started in England from September 2023. Postgraduate Loan if you took a master's or doctoral loan. Your Student Loans Company account says which.
- Does the student loan affect my credit score or a mortgage?
- It doesn't appear on your credit file. Mortgage lenders do count the monthly repayment as an outgoing when they work out what you can afford, which slightly reduces the amount you can borrow. It won't stop you getting a mortgage.
- When do repayments start?
- The April after you finish or leave your course, and only once you earn above the threshold. If you start a job in September on £28,000 with a Plan 5 loan, your employer starts deducting the following April. If you earn under the threshold in a given pay period, nothing is taken that period.
Exercises are practice, not evidence of career fit or a qualification. How to read our guides and report a correction.
Sources
- Repaying your student loan: what you pay · GOV.UK
- Graduate labour market statistics, calendar year 2024 · Department for Education, Explore education statistics
How this page is written
Sources support the factual background, not a guarantee that an exercise predicts career fit. Fictional practice material is labelled. Dates record content updates; no independent expert review is implied. More about OffLadder.