How Student Loan Repayments Actually Work
Reviewed against the official guidance linked in this article. Rates and eligibility can change. Check the linked official sources for your circumstances. See our editorial policy.
Check the 2026/27 repayment thresholds for Plans 1, 2, 4, 5 and postgraduate loans, with monthly PAYE examples.
For 2026/27, you repay 9% of pay above your student loan plan's threshold. A separate postgraduate loan deduction is 6% above its threshold. Your loan balance does not set your monthly PAYE deduction.
Repayment thresholds for 2026/27
These thresholds apply from 6 April 2026 to 5 April 2027. The monthly figures are HMRC's payroll thresholds, rather than rounded annual estimates.
| Plan | Annual threshold | Monthly threshold | Repayment rate |
|---|---|---|---|
| Plan 1 | £26,900 | £2,241.66 | 9% |
| Plan 2 | £29,385 | £2,448.75 | 9% |
| Plan 4 | £33,795 | £2,816.25 | 9% |
| Plan 5 | £25,000 | £2,083.33 | 9% |
| Postgraduate loan | £21,000 | £1,750 | 6% |
Source: HMRC's 2026/27 employer rates and thresholds.
Which plan applies to you?
Your plan depends on your funding body and course start date, rather than simply where your university is.
- Student Finance England: undergraduate courses started before September 2012 generally use Plan 1, those started from September 2012 to July 2023 use Plan 2 and those started from August 2023 use Plan 5.
- Student Finance Wales: undergraduate courses generally use Plan 1 before September 2012 and Plan 2 from September 2012. Plan 5 does not apply to Welsh-funded loans.
- Student Awards Agency Scotland: relevant loans use Plan 4.
- Student Finance Northern Ireland: relevant loans use Plan 1.
Postgraduate funding can follow different rules depending on the funding body. Check GOV.UK's plan guide or your repayment account before selecting a plan. Plan 5 repayments began from April 2026 at the earliest.
A £35,000 salary on Plan 2
With equal monthly gross pay, £35,000 divided by 12 is about £2,916.67.
- Subtract the monthly Plan 2 threshold: £2,916.67 − £2,448.75 = £467.92.
- Apply 9%: £467.92 × 9% = £42.11.
- Round down to a whole pound for the PAYE deduction: £42 a month.
This follows HMRC’s payroll rounding rules.
Across 12 identical monthly pay periods that is £504. The annual formula, (£35,000 − £29,385) × 9%, gives £505.35 before payroll rounding. Dividing an annual estimate by 12 does not always reproduce your payslip.
At the same salary, Plan 1 gives a monthly deduction of £60, Plan 4 gives £9 and Plan 5 gives £75. A postgraduate loan adds £70 a month. Someone with Plan 2 and a postgraduate loan would therefore pay £112 a month under these assumptions.
Bonuses, changing pay and multiple loans
PAYE repayments use earnings in each pay period. A bonus can trigger a deduction even when your full-year income ends below the annual threshold. You may be able to request a refund after the tax year ends if your annual income was below the relevant threshold.
A postgraduate deduction can run alongside an undergraduate deduction. If you have more than one undergraduate plan, do not add separate 9% deductions together: payroll normally uses the lowest applicable threshold. Check the repayment rules for your combination.
Check the effect on your take-home pay
Enter your salary and loan plan in the salary calculator. The result estimates PAYE deductions for the current tax year. Irregular pay, self-employment, overseas repayments and final loan repayments can need different treatment.
Voluntary overpayments do not necessarily reduce your regular PAYE deduction while a balance remains. Consider the interest, likely write-off and your other commitments before paying extra. Check your repayment account and contact the Student Loans Company if you are close to clearing the balance.