How Student Loan Repayments Actually Work
By calculatemysalary.co.uk Editorial Team
A clear breakdown of student loan repayment thresholds and rates for every plan type, with worked examples showing exactly what you pay each month.
Student loan repayments come straight out of your salary through PAYE. How much depends on two things: which repayment plan you're on and how much you earn. The maths is simple once you know the numbers, but most people never look them up.
Here are the thresholds and rates for 2025/26.
Which plan are you on?
Your plan depends on when and where you studied:
| Plan | Who it covers | Annual threshold | Rate |
|---|---|---|---|
| Plan 1 | England/Wales, started before Sept 2012 | £24,990 | 9% |
| Plan 2 | England/Wales, started Sept 2012 to July 2023 | £27,295 | 9% |
| Plan 4 | Scotland, started after Sept 1998 | £31,395 | 9% |
| Plan 5 | England/Wales, started after Aug 2023 | £25,000 | 9% |
| Postgraduate | Master's or doctoral loan | £21,000 | 6% |
Plan 5 repayments start from April 2026 at the earliest, so no one on Plan 5 is repaying yet in 2025/26.
If you're not sure which plan you're on, check your payslip (it shows the plan type) or log in to your Student Loans Company account.
How the calculation works
You pay a percentage of everything you earn above your threshold. Nothing on earnings below it.
The formula: (Salary - Threshold) x Rate = Annual repayment
Divide by 12 for the monthly figure.
Plan 2, earning £35,000
- Above threshold: £35,000 - £27,295 = £7,705
- Annual repayment: 9% x £7,705 = £693.45
- Monthly: £57.79
Plan 1, earning £35,000
- Above threshold: £35,000 - £24,990 = £10,010
- Annual repayment: 9% x £10,010 = £900.90
- Monthly: £75.08
Postgraduate loan, earning £35,000
- Above threshold: £35,000 - £21,000 = £14,000
- Annual repayment: 6% x £14,000 = £840
- Monthly: £70.00
Plan 2, earning £30,000
- Above threshold: £30,000 - £27,295 = £2,705
- Annual repayment: 9% x £2,705 = £243.45
- Monthly: £20.29
At lower salaries, the repayments are fairly small. They ramp up as your earnings increase.
What counts as income
Your employer deducts repayments based on gross pay, including bonuses, overtime, and commission. A big bonus in one month means a higher student loan deduction that month. It drops back down afterwards.
If you're self-employed, repayments are calculated on your taxable profits through Self Assessment.
Multiple loans
If you have both an undergraduate and a postgraduate loan, you repay both at the same time. The thresholds and rates apply separately to each.
Earning £35,000 with a Plan 2 loan and a postgraduate loan:
- Plan 2: £57.79/month
- Postgraduate: £70.00/month
- Combined: £127.79/month
That's about 4.4% of your gross salary going to loan repayments, on top of tax and NI.
Earning below the threshold
If your salary falls below the threshold, you pay nothing. The loan still exists and interest keeps accruing on most plan types, but no repayments are deducted.
Loans are eventually written off — the period depends on your plan type (typically 25 to 40 years from when you first become eligible to repay). Check with the Student Loans Company for the exact write-off date on your loan.
Should you overpay?
You can make voluntary overpayments at any time with no penalty. Whether you should is a different question.
For most Plan 2 borrowers, the balance is high enough and the repayment period long enough that the loan will probably be written off before it's fully repaid. If that's you, overpaying just means handing HMRC money you'd never have had to pay. You'd be better off putting that money into a pension or ISA.
The exception: if you earn well above average and your balance is low enough that you'd clear it before the write-off date, paying it off sooner saves you interest. The GOV.UK repayment calculator can help you work out which camp you fall into.
Student loans and mortgages
Lenders factor your student loan repayment into their affordability calculations. It reduces your disposable income, which can limit how much you're able to borrow.
One thing that doesn't affect your mortgage application: the total balance on your student loan. Lenders care about the monthly repayment coming out of your pay, not the headline debt figure. Student loans don't appear on your credit file either.
See your full take-home
Use our salary calculator to see how student loan repayments combine with income tax, NI, and pension contributions to determine your actual monthly take-home.