UK student loan repayments depend on which plan you are on, how much you earn, and when your loan gets written off. Here is a complete guide to all plan types with worked examples.
Your plan type determines your repayment threshold, rate, and write-off date. Most people are on Plan 1 or Plan 2, but newer graduates may be on Plan 5.
Plan 1: Started before September 2012 (England/Wales) or any time in Scotland/Northern Ireland. Repay 9% above £24,990.
Plan 2: Started from September 2012 onwards (England/Wales). Repay 9% above £27,295.
Plan 4: Scottish students who started from September 2012. Repay 9% above £31,395.
Plan 5: Started from August 2023 onwards (England). Repay 9% above £25,000.
Postgraduate Loan: Masters or doctoral loan taken from 2016/17 onwards. Repay 6% above £21,000.
If you are not sure which plan you are on, check your payslip (it shows the plan type) or log in to the Student Loans Company portal.
2025/26 repayment thresholds:
Plan 1: £24,990 (9% above) Plan 2: £27,295 (9% above) Plan 4: £31,395 (9% above) Plan 5: £25,000 (9% above) Postgraduate: £21,000 (6% above)
Student loan repayments are a percentage of your income above the threshold — not on your total income. They are deducted from your salary by your employer (through PAYE) or paid through self-assessment if you are self-employed.
Example (Plan 2): You earn £40,000. Repayment: 9% × (£40,000 − £27,295) = 9% × £12,705 = £1,143.45 per year (£95.29/month).
Example (Plan 1): You earn £40,000. Repayment: 9% × (£40,000 − £24,990) = 9% × £15,010 = £1,350.90 per year (£112.58/month).
If you have both an undergraduate and postgraduate loan, both are deducted simultaneously. A £50,000 earner on Plan 2 + Postgraduate pays: 9% × (£50,000 − £27,295) = £2,043 plus 6% × (£50,000 − £21,000) = £1,740. Total: £3,783/year.
Our tax calculator handles all plan types and shows student loan repayments alongside your income tax and NI.
This is where it gets painful. If you earn between £100,000 and £125,140, you are already paying an effective 60% marginal rate due to the personal allowance taper. Student loan repayments stack on top of this.
A Plan 2 borrower in the 60% trap band pays: 60% effective income tax + 2% NI + 9% student loan = 71% effective marginal rate. You keep just £290 of every extra £1,000.
With a postgraduate loan as well: 60% + 2% + 9% + 6% = 77% effective marginal rate. You keep £230 per £1,000.
This is the highest effective tax rate faced by any UK employee. Our 60% trap analysis tool calculates these combined rates for your specific situation.
Effective marginal rates in the £100k–£125k band:
No student loan: 62% (60% tax + 2% NI) Plan 1 or 2: 71% (add 9%) Plan 2 + Postgrad: 77% (add 9% + 6%) Scotland + Plan 2: 78.5% (67.5% trap + 2% NI + 9%)
Student loans do not last forever. Each plan has a write-off date, after which any remaining balance is cancelled — completely tax-free.
Plan 1: Written off at age 65, or 25 years after the first April after graduation (whichever comes first).
Plan 2: Written off 40 years after the first April you were due to repay.
Plan 4: Written off 30 years after the first April you were due to repay, or when you turn 65.
Plan 5: Written off 40 years after the first April you were due to repay.
Postgraduate: Written off 30 years after the first April you were due to repay.
For many Plan 2 borrowers, the write-off date means they will never repay in full. The average Plan 2 borrower will have a significant balance written off. This changes the calculation on whether to make voluntary repayments.
This is one of the most asked questions in UK personal finance, and the answer depends entirely on your loan balance, interest rate, income trajectory, and plan type.
When voluntary repayments make sense: You are on Plan 1 (1.25% interest in 2025/26), have a relatively small balance left, and will definitely repay in full before the write-off date. In this case, paying early saves you interest.
When voluntary repayments do NOT make sense: You are on Plan 2, have a large balance (£40,000+), and are unlikely to repay in full before the 40-year write-off. Making extra payments just reduces the amount that gets written off — you are essentially paying towards a debt that would have been cancelled.
The income test: If you earn enough that you will definitely repay your loan in full through normal deductions before the write-off date, voluntary repayments save interest. If you will not repay in full, extra payments are wasted. Use the Student Loans Company repayment calculator to check your trajectory.
Salary sacrifice reduces your gross salary, which in turn reduces your student loan repayments. This can be a benefit or a drawback depending on your situation.
If you will not repay in full: Lower repayments from salary sacrifice mean more money in your pocket now, and more balance written off later. This is a win-win.
If you will repay in full: Lower repayments extend the time to full repayment, meaning you pay more interest over the lifetime of the loan. But the tax and NI savings from salary sacrifice usually far outweigh the extra student loan interest.
For most high earners, salary sacrifice is still beneficial even considering the student loan impact. Our strategies tool can model the combined effect for your specific situation.
If you are self-employed, student loan repayments are calculated on your tax return and paid through self-assessment — not deducted from your salary. The same thresholds and rates apply, but calculated on your total taxable profits for the year.
This means repayments come as a lump sum (or payments on account) rather than monthly deductions. Budget for this alongside your income tax and NI payments.
If you have both employed and self-employed income, PAYE deductions from employment count towards your total. Self-assessment collects any shortfall.
Plan 5 applies to English students starting university from August 2023. The key differences from Plan 2:
Lower threshold: £25,000 vs £27,295 (Plan 2). You start repaying sooner.
Lower interest rate: RPI only (no additional percentage based on income). Plan 2 charges RPI + up to 3% for higher earners.
Same write-off period: 40 years after the first April you were due to repay.
Lower tuition fees: Capped at £9,250 (same as Plan 2 currently). There is discussion of increasing this, which would increase borrowing.
The lower interest rate is a significant improvement over Plan 2. More Plan 5 borrowers are likely to repay in full, making the loan more like a traditional debt than the graduate tax that Plan 2 effectively becomes.
1. Know your plan type — it determines your threshold, rate, and write-off date. Check your payslip or the SLC portal.
2. Student loans stack with the 60% trap — if you earn £100k+, your effective marginal rate could be 71% or higher.
3. Think carefully before making voluntary repayments — if you will not repay in full before write-off, extra payments may be wasted.
4. Salary sacrifice reduces repayments — this is usually beneficial, even if it extends the repayment period.
5. Use our [calculator](/calculator) to see your exact student loan deductions alongside your full tax breakdown.