Student Loan Repayments: Plans 1, 2, 4, 5 and Postgraduate

UK student loan repayments work more like an extra tax than a normal loan: you repay a percentage of income above a threshold, deductions happen automatically through payroll, and the balance is written off after a set period regardless of what remains. Which plan you are on determines everything, so start there.

2026/27 thresholds by plan

The maths, done properly

The rate applies only to income above the threshold. On Plan 2 with a £35,000 salary, the calculation is 9% of £5,615 (the amount above £29,385), which is £505 a year or about £42 a month. It is never 9% of your whole salary. Repayments are calculated per pay period, so a bonus month can trigger a deduction even if your annual income sits below the threshold. Use the salary calculator with your plan selected to see the exact monthly figure alongside tax and National Insurance.

Postgraduate loans stack

A Postgraduate loan is repaid at the same time as an undergraduate plan. A graduate on Plan 2 plus a Postgraduate loan repays 15% of income above the respective thresholds, which meaningfully changes the marginal deduction rate. Combined with 20% income tax and 8% National Insurance, a basic-rate graduate with both loans keeps only 57p of each extra £1 earned.

Should you repay early?

Usually the wrong question for Plan 2 and Plan 5 borrowers. Most will never repay in full before the write-off (30 years for Plan 2, 40 for Plan 5), so voluntary repayments are often money given away. The calculus differs for high earners early in their careers who will clear the balance anyway, where interest savings are real. Weigh it against pension contributions, which reduce your student loan deductions too, since repayments are assessed on pay after salary sacrifice; see the pensions and salary sacrifice guide.

Common pitfalls

• Being put on the wrong plan when starting a job: the starter checklist asks which plan you are on, and guessing wrong changes your deductions immediately.
• Continuing to repay after the balance clears. The Student Loans Company suggests switching to direct debit in the final year to stop overpayment.
• Self-employed borrowers pay through Self Assessment in one annual lump, which surprises people who moved from PAYE.