UK Student Loan Repayment Guide 2026 — Plans 1, 2, 4 and 5
Student loan repayments are often misunderstood. They work very differently from commercial loans — you don't get chased for non-payment, you pay based on income, and many people will never repay in full. Understanding the system helps you make smarter decisions.
How repayments work
You repay 9% of earnings above the threshold for your plan (6% for postgraduate loans). If your income drops below the threshold, repayments stop automatically. There are no missed payment penalties and it doesn't affect your credit score.
Repayment thresholds 2026/27
| Plan | Who it covers | Threshold 2026/27 | Write-off |
|---|---|---|---|
| Plan 1 | Started before Sept 2012 (England/Wales) or any year (NI) | £26,900/yr | Age 65 or 25 years after repayment starts |
| Plan 2 | Started Sept 2012–July 2023 (England/Wales) | £29,385/yr | 30 years after April following graduation |
| Plan 4 | Scottish borrowers | £33,795/yr | Age 65 or 30 years |
| Plan 5 | Started August 2023+ (England) | £25,000/yr | 40 years after April following graduation |
| Postgrad | Masters/doctoral loans | £21,000/yr | 30 years |
How much do you repay on each plan?
On a £40,000 salary with a Plan 2 loan: £40,000 − £29,385 = £10,615 above threshold. At 9%: £955/year (£80/month).
On the same salary with Plan 5: £40,000 − £25,000 = £15,000 above threshold. At 9%: £1,350/year (£113/month).
Should you overpay your student loan?
For most Plan 2 and Plan 5 borrowers, voluntary overpayments are rarely financially optimal. Here's why:
- If you won't repay in full before write-off, every extra pound you pay is wasted
- Interest on Plan 2 is capped at RPI (currently ~3.5%), which is often lower than what you'd earn in savings
- Plan 5 interest is also capped at RPI for most borrowers
The exception is Plan 1 borrowers with small balances who are likely to repay in full — here, overpaying makes sense as there's no write-off that would erase the debt anyway.
Student loan and take-home pay
Student loan repayments are collected through PAYE alongside tax and NI — you don't need to do anything. They appear on your payslip and are calculated based on your employment income. Investment income, rental income and other sources may also be included via self-assessment.
See your student loan deduction
Our salary calculator shows exact student loan repayments alongside tax and NI for all plans.
See how student loan affects your take-home pay
Our salary calculator includes all student loan plans so you can see your exact monthly deduction.