Student Loan Repayments: Which Plan You Are On and What It Costs Each Month
A student loan repayment is the third line down on most graduate payslips and the one people understand least. It is not a debt in the ordinary sense, the balance has almost no bearing on what you pay, and two people on identical salaries can hand over wildly different amounts depending on which year they started university and which country funded them. There are now five separate plans running at once. This is what each one costs in 2026/27.
Work Out Which Plan You Are On
The plan is set by who lent you the money and when you started your course, not by where you studied or where you live now.
- Plan 1: Student Finance Northern Ireland, all courses. Also England and Wales for courses that started before 1 September 2012.
- Plan 2: Student Finance England for undergraduate courses, PGCEs, Advanced Learner Loans and Higher Education Short Course Loans that started between 1 September 2012 and 31 July 2023. Also Student Finance Wales for undergraduate courses and PGCEs from 1 September 2012 onwards.
- Plan 4: Student Awards Agency Scotland, all undergraduate and postgraduate courses.
- Plan 5: Student Finance England for courses that started on or after 1 August 2023.
- Postgraduate Loan: master's and doctoral loans from England and Wales, and it sits on top of any undergraduate plan rather than replacing it.
If you are unsure, your online student finance account states the plan type, and so does the SL1 start notice HMRC sends your employer. Getting it wrong on a new starter checklist is one of the most common payroll errors going.
The Thresholds and Rates for 2026/27
You repay a percentage of everything you earn above the threshold for your plan, and nothing at all on the earnings below it. The balance you owe makes no difference to the monthly figure.
| Plan | Annual threshold | Monthly | Weekly | Rate above it |
|---|---|---|---|---|
| Plan 1 | £26,900 | £2,241 | £517 | 9% |
| Plan 2 | £29,385 | £2,448 | £565 | 9% |
| Plan 4 | £33,795 | £2,816 | £649 | 9% |
| Plan 5 | £25,000 | £2,083 | £480 | 9% |
| Postgraduate Loan | £21,000 | £1,750 | £403 | 6% |
What That Comes To in Practice
Monthly deductions on three common salaries, taken from the monthly thresholds because that is how payroll actually calculates them.
| Plan | £28,000 | £35,000 | £50,000 |
|---|---|---|---|
| Plan 1 | £8 | £60 | £173 |
| Plan 2 | Nothing | £42 | £154 |
| Plan 4 | Nothing | £9 | £121 |
| Plan 5 | £22 | £75 | £187 |
| Postgraduate Loan | £35 | £70 | £145 |
The spread at £35,000 is the striking bit. A Scottish graduate on Plan 4 pays £9 a month. An English graduate who started in 2024 on Plan 5 pays £75. Same salary, same job, eight times the deduction, purely because of the year they enrolled and who funded them.
The Real Marginal Rate for a Graduate
Add the loan to income tax and National Insurance and the picture changes. A basic rate taxpayer on Plan 2 keeps 63p of the next pound they earn: 20p goes in tax, 8p in National Insurance and 9p to the loan. A Plan 2 graduate who also has a Postgraduate Loan keeps 57p, because another 6p goes on the second deduction.
Above £50,270 it gets sharper. Income tax rises to 40% while National Insurance drops to 2%, so the combined figure is 51% on Plan 2 and 57% with a Postgraduate Loan on top. That is worth knowing when you are weighing up a promotion or a pension contribution, because pension salary sacrifice reduces the earnings the loan deduction is calculated on as well as the tax and NI.
Interest Does Not Change What You Pay
This is the single most misunderstood feature of the system. Interest affects the balance, and the balance affects nothing except whether you ever clear it. Your monthly repayment is 9% of the income above your threshold whether you owe £8,000 or £80,000. A balance that grows faster than you can repay it is unpleasant to look at, but it does not cost you an extra penny a month.
What it does affect is whether voluntary overpayments are worth making. If you are on a high salary and genuinely on track to clear the loan before write-off, overpaying saves real interest. If you are never going to clear it, overpaying is money handed over for nothing, because the balance would have been written off anyway. The honest answer for most people on Plan 2 and Plan 5 is the second one, but it depends entirely on your own earnings path.
When Each Plan Is Written Off
- Plan 1: 25 years after the April you were first due to repay, for loans first paid on or after 1 September 2006. Earlier loans are written off at 65.
- Plan 2: 30 years after the April you were first due to repay.
- Plan 4: 30 years, for loans first paid on or after 1 August 2007. Earlier ones at 65 or after 30 years, whichever comes first.
- Plan 5: 40 years after the April you were first due to repay.
- Postgraduate Loan: 30 years, for England and Wales borrowers.
The clock runs from the April after you left the course, not from the date you actually started repaying. Years spent earning under the threshold still count towards it. The write-off is not treated as taxable income.
Five Things That Go Wrong
The wrong plan on your payroll record. A Plan 1 deduction taken from someone who should be on Plan 2 costs about £18 a month at £35,000. Check the plan type on your first payslip in any new job.
Repayments starting too early. You are not due to repay until the April after your course ends. If deductions start before that, tell your employer and HMRC.
A bonus triggering a deduction you do not owe. Repayments are worked out per pay period, not cumulatively. A one-off payment that takes a single month above the monthly threshold produces a deduction even if your income for the whole year is below the annual threshold, and payroll will never refund it. Contact the Student Loans Company after the tax year ends with your P60 and ask for it back.
Carrying on past the end. In the final couple of years, switch to direct debit with the Student Loans Company. PAYE has no idea how much is left and will happily overshoot, and reclaiming it afterwards takes months.
Two jobs. Each employer applies the threshold to their own payroll, so you can earn well over the threshold in total while paying nothing, or pay on both. It squares up through Self Assessment if you file one.
Checking Your Own Position
Your Student Loans Company online account shows the plan type, the balance, every payment received and the projected write-off date. Your payslip shows what was deducted this month, and your P60 shows the total for the year. Those two should agree; if they do not, the payroll record is usually the culprit.
It is worth doing once a year, ideally in April when the thresholds change. A wrong plan type left running for five years is not a small amount of money, and the longer it sits there the harder it is to unpick.