Student loan repayments: plans, thresholds and what comes off your payslip

Why there are different repayment plans

The UK has run several student loan systems over the years, and which one applies to you depends mainly on when and where you started your course. Plan 1 covers most English and Welsh students who started before 2012, Plan 2 covers those from 2012 to 2023, and Plan 5 covers new starters from 2023 onwards.

Scottish students typically have Plan 4, and postgraduate loans run as a separate scheme entirely, often alongside an undergraduate loan on a different plan, which means some people repay two loans simultaneously through separate deductions.

Because each plan has its own threshold and sometimes its own rate, two people earning identical salaries can have noticeably different deductions purely based on which plan they're on, which is a common source of payslip confusion.

The repayment thresholds for 2025/26

Plan 1 has a repayment threshold of roughly £26,065 a year, Plan 2 sits at around £28,470, Plan 4 at roughly £32,745, and Plan 5 at around £25,000, though these figures are reviewed and can shift slightly each tax year.

Postgraduate loans have a separate, lower threshold of around £21,000 and run alongside any undergraduate plan, which is why some graduates see two distinct student loan deductions on the same payslip rather than one combined figure.

Once your income crosses the relevant threshold, you repay 9% of everything above it for undergraduate plans, and 6% above the postgraduate threshold, calculated per pay period in a similar way to National Insurance rather than cumulatively across the year.

How the deduction is actually calculated

Your employer calculates student loan repayments automatically based on the plan type HMRC has told them applies to you, deducting 9% of everything you earn in that pay period above the relevant threshold, divided down to a weekly or monthly figure.

This means the deduction can fluctuate month to month if your pay does, for instance with a bonus month, since it's assessed per period rather than smoothed across the year. A single high-earning month can trigger a noticeably larger deduction than your average monthly pay would suggest.

Our income tax calculator includes student loan repayments in its breakdown, which is often the easiest way to see how a particular plan and salary combination affects your actual take-home pay without working through the percentages manually.

Interest and why balances can grow rather than shrink

Student loan interest is applied to your outstanding balance continuously, and for many borrowers, especially on Plan 2 and Plan 5, the interest rate can be higher than the rate at which lower earners are repaying, meaning the balance actually grows for a period even while repayments are being made.

This isn't a sign that anything has gone wrong; it's built into how the system works, and for most borrowers the loan is designed to be written off after a set number of years rather than fully repaid, particularly on lower or middle incomes.

It's worth checking your annual statement to understand the interest rate being applied to your specific plan, since it varies and is sometimes linked to income level as well as plan type, which surprises people who assume it's a single fixed rate.

When your loan gets written off

Each plan has a write-off period after which any remaining balance is cancelled regardless of how much has been repaid. Plan 1 loans are typically written off 25 years after you became eligible to repay, Plan 2 after 30 years, and Plan 5 after 40 years, a notably longer period than earlier plans.

This means for a meaningful proportion of borrowers, particularly on lower or middle incomes for most of their career, the loan is never fully repaid and functions closer to a graduate tax for a set number of years rather than a traditional debt.

Because of this, deciding whether to make voluntary overpayments is a genuinely personal calculation based on your expected future earnings, not a simple case of paying off debt as fast as possible, and it's worth thinking carefully before doing so.

Should you make voluntary overpayments?

Whether overpaying makes sense depends heavily on how much you expect to earn over your career and how close you are to the write-off date. High earners who expect to fully repay the loan regardless can benefit from overpaying to reduce total interest, similar to paying down any other debt early.

For lower or middle earners who are unlikely to clear the balance before it's written off, overpaying can mean handing over money that would otherwise have been cancelled entirely, which is rarely the better outcome.

This is a case where running the numbers based on your realistic future income matters far more than general advice, since the right answer genuinely differs from person to person and isn't something a simple rule of thumb captures well.

Self-employed student loan repayments

If you're self-employed, student loan repayments are calculated through self-assessment rather than through payroll, based on your annual profit above the threshold, and paid alongside your income tax and National Insurance bill.

This means the same lump-sum timing issue that catches out self-employed income tax also applies here: it's worth setting aside an estimate for student loan repayments throughout the year rather than being surprised by the total in January.

Our self-employed tax calculator factors student loan repayments into its overall estimate, which makes budgeting through the year considerably more predictable than trying to track it separately from your other tax obligations.

Checking which plan you're actually on

It's surprisingly common for people to be unsure which plan applies to them, especially if they've studied more than one course or moved between the different UK nations' systems partway through their studies.

The clearest way to check is through your student loan account online, which shows your plan type, current balance and interest rate directly, rather than relying on memory or assumptions based on when you think you started.

If your payslip shows a plan type that doesn't match your account, it's worth flagging to your employer's payroll team quickly, since an incorrect plan can mean you're either overpaying or underpaying without realising until a later reconciliation catches it.

Common questions

How much student loan will come off my payslip?

You repay 9% of your income above your plan's threshold each pay period, so the amount depends on your salary and which plan you're on. This is an estimate; using a calculator with your specific salary and plan type will give a more accurate monthly figure than a general rule.

Does my student loan affect my credit score?

No, UK student loans don't appear on credit reference agency records and don't affect your credit score, since they're administered by the Student Loans Company rather than treated as a standard commercial loan for credit purposes.

What happens to my student loan if I move abroad?

You're still required to keep repaying based on your overseas income, converted using specific thresholds set for different countries, and you need to inform the Student Loans Company directly. Repayments aren't automatically deducted abroad, so it becomes your responsibility to arrange payments yourself.

Can I pay off my student loan early?

Yes, voluntary overpayments are allowed at any time directly through the Student Loans Company. Whether it's a good idea depends on your plan, expected future earnings and how close you are to the write-off date, so it's worth thinking it through rather than assuming early repayment is automatically best.

Why do I have two student loan deductions on my payslip?

This usually happens if you have both an undergraduate loan and a postgraduate loan, which run as separate schemes with different thresholds and rates. Both can be deducted simultaneously, which is normal and not a payroll error, though it's worth confirming both figures match your online loan account.

Tools for this

• Income Tax Calculator