How Student Loan Repayments Work in the UK
UK student loans are income based. You only repay when your earnings are above a threshold, and the amount you pay is a percentage of what you earn over that threshold. If your income drops, your repayments drop too.
- Repay via payroll if employed, or through Self Assessment if self employed
- You repay a fixed percentage of income over your plan threshold
- Any remaining balance is written off after a set number of years
- You can have more than one plan at once, which affects how deductions are taken
Which Plan Are You On?
Your plan depends on when and where you studied, and the type of loan:
- Plan 1: Usually for students who started in England or Wales before 2012.
- Plan 2: For most students who started from 2012 in England or Wales.
- Plan 4: For Scottish students.
- Plan 5: New for students starting from 2023 in England.
- Postgraduate Loan: For Master’s or PhD loans.
Your payslip usually shows the plan used for deductions. You can also check with the Student Loans Company if you are unsure.
Repayment Thresholds and Rates (2025/26)
You repay a percentage of your income above the threshold:
- Plan 1: 9% of income over £24,990
- Plan 2: 9% of income over £27,295
- Plan 4: 9% of income over £31,395
- Plan 5: 9% of income over £25,000
- Postgraduate: 6% of income over £21,000
Example Repayments
| Plan | Income | Threshold | Amount over threshold | Rate | Estimated repayment |
|---|---|---|---|---|---|
| Plan 2 | £35,000 | £27,295 | £7,705 | 9% | £693.45 per year (~£57.79 per month) |
| Plan 5 | £30,000 | £25,000 | £5,000 | 9% | £450 per year (£37.50 per month) |
| Postgraduate | £40,000 | £21,000 | £19,000 | 6% | £1,140 per year (£95 per month) |
When Do Repayments Stop?
Your loan is written off after a set period, even if you have not repaid in full:
- Plan 1: 25 years after the April you were first due to repay
- Plan 2: 30 years after the April you were first due to repay
- Plan 4: 30 years after the April you were first due to repay
- Plan 5: 40 years after the April you were first due to repay
- Postgraduate: 30 years after the April you were first due to repay
Write off rules can vary for older cohorts. If you studied a long time ago, check your original loan terms.
How Interest Works
Interest is applied to your balance and affects how long you repay, not the percentage you pay each month.
- Plan 2: Interest equals RPI plus up to 3 percent depending on income.
- Plan 5: Interest equals RPI only.
Rates can change during the year. Your repayment amount still only depends on income and threshold.
How Repayments Are Collected
- Employed: Taken automatically through PAYE by your employer once HMRC flags your plan.
- Self employed: Paid via Self Assessment. You enter your plan type and HMRC calculates what you owe.
- Multiple plans: You can have, for example, Plan 2 plus a Postgraduate Loan. Deductions are taken for each according to the rules.
Moving Abroad
If you leave the UK for more than three months you must tell the Student Loans Company. Your repayments are based on overseas income thresholds. If you do not provide income evidence, SLC may apply a default monthly amount.
Overpayments and Refunds
- Near the end of your loan ask your employer to switch to direct debit collection so you avoid overpaying due to payroll timing.
- Refunds are possible if you paid when you were under the threshold or paid after your balance had cleared. Contact SLC with payslips and P60s.
- Voluntary repayments can shorten how long you repay, but they are not right for everyone. Consider other priorities like high interest debts and emergency savings first.
For many graduates, student loan deductions feel like a small percentage based tax on income above the threshold. If you do not earn enough, you pay nothing, and any balance is eventually written off.
Frequently Asked Questions
What if my income fluctuates during the year?
PAYE adjusts automatically month to month. If you are self employed, your annual Self Assessment reconciles what you owe based on your final income for the year.
Do student loan repayments affect my credit score?
Student loans do not appear on UK credit reports like other debts. Lenders may still consider your net income and outgoings when assessing affordability.
Can I pause repayments?
You do not need to apply for a pause. If your income falls below your plan threshold, repayments stop automatically. Tell your employer or update HMRC if the code on your payslip looks wrong.
I have two plans. Which is paid first?
HMRC rules set how deductions are split when you have more than one plan. You will see separate lines on your payslip if you also have a Postgraduate Loan.
Should I make extra payments?
Only if you are confident you will fully repay before your write off date and you have covered higher priority goals like emergency savings and expensive debts.