Student Loan Repayment 2025/26: Plans, Thresholds & How Much You'll Pay

Student loan repayments are deducted from your salary automatically once you earn above a certain threshold. Unlike regular debt, repayments are based on what you earn — not what you owe. The loan is eventually written off if you don't repay it in full. Understanding which plan you're on and how repayments work is essential for budgeting your take-home pay.

Student Loan Repayment Thresholds 2025/26

Plan	Annual Threshold	Monthly Threshold	Rate	Who's On It
Plan 1	£24,990	£2,083	9%	England/Wales students who started before September 2012, all NI and Scottish students
Plan 2	£27,295	£2,274	9%	England/Wales students who started September 2012 onwards
Plan 4	£31,395	£2,616	9%	Scottish students (SAAS funded)
Plan 5	£25,000	£2,083	9%	England students starting from September 2023
Postgraduate Loan	£21,000	£1,750	6%	Postgraduate Master's or Doctoral loans from 2016/17 onwards

You only repay 9% (or 6%) of income above the threshold — not 9% of your entire salary. This is a crucial distinction that many people misunderstand.

Worked Repayment Examples

Plan 2 on a £35,000 Salary

Income above threshold: £35,000 - £27,295 = £7,705
Annual repayment: £7,705 × 9% = £693.45
Monthly repayment: £57.79

See full £35,000 breakdown

Plan 1 on a £30,000 Salary

Income above threshold: £30,000 - £24,990 = £5,010
Annual repayment: £5,010 × 9% = £450.90
Monthly repayment: £37.58

See full £30,000 breakdown

Postgraduate Loan on a £40,000 Salary

Income above threshold: £40,000 - £21,000 = £19,000
Annual repayment: £19,000 × 6% = £1,140
Monthly repayment: £95.00

Both Plan 2 and Postgraduate on £45,000

If you have both an undergraduate and postgraduate loan, you repay both simultaneously:

Plan 2: (£45,000 - £27,295) × 9% = £1,593.45/year
PG Loan: (£45,000 - £21,000) × 6% = £1,440.00/year
Total: £3,033.45/year (£252.79/month)

Combined with National Insurance at 8% and income tax at 20-40%, the effective marginal deduction rate can exceed 50% — worth understanding before negotiating a pay rise.

Which Plan Am I On?

If you're not sure:

Check your payslip — It should show which plan's repayments are being deducted
Log into your Student Loans Company (SLC) account at gov.uk/sign-in-to-manage-your-student-loan-balance
Call the SLC on 0300 100 0611

Quick Guide

English/Welsh, started uni before September 2012: Plan 1
English/Welsh, started uni September 2012 – August 2023: Plan 2
English, started uni September 2023 onwards: Plan 5
Scottish (SAAS funded): Plan 4
Northern Irish: Plan 1
Postgraduate Master's or PhD loan: Postgraduate Loan (in addition to your undergraduate plan)

When Is My Loan Written Off?

Plan	Written Off	Practical Implication
Plan 1	Age 65, or 25 years after first eligible repayment (whichever is earlier)	Most Plan 1 loans are relatively small. Many people repay them in full.
Plan 2	30 years after first eligible repayment	Average debt of ~£50,000. Most graduates won't repay in full — it effectively acts as a graduate tax.
Plan 4	30 years after first eligible repayment	Scottish tuition is lower, so debts are smaller and more likely to be fully repaid.
Plan 5	40 years after first eligible repayment	Longer repayment window with lower threshold. Total repaid may be higher despite lower annual payments.
Postgraduate	30 years after first eligible repayment	Maximum loan is £12,471 (Master's) or £29,390 (Doctoral).

Outstanding balances are written off completely — no tax charge, no impact on credit score, no further obligation.

Interest Rates on Student Loans

Plan	Interest Rate (2025/26)	How It's Calculated
Plan 1	Retail Price Index (RPI) or Bank of England base rate + 1%, whichever is lower	Usually around 4-6%
Plan 2	RPI while studying; RPI + up to 3% after graduation (based on income)	Can be 7-8% for higher earners during high-RPI periods
Plan 4	Same as Plan 1
Plan 5	RPI only (capped at prevailing market rates)	Lower than Plan 2 in most cases
Postgraduate	RPI + 3%	Highest rate of all plans

Interest rates on student loans are higher than many people realise. However, since most Plan 2 borrowers won't repay in full, the interest rate is largely irrelevant for them — it just changes how much of the loan is left to be written off.

Should You Repay Early?

This is one of the most common financial questions for graduates. The answer depends on your plan and earnings:

Consider Early Repayment If:

You're on Plan 1 with a small balance (under ~£15,000) — you'll likely repay in full anyway, so early repayment saves interest
You're on Plan 2 earning significantly above average (£50,000+) and your balance is moderate — you'd repay in full well before the 30-year write-off
You have spare cash earning less than the student loan interest rate

Don't Repay Early If:

You're on Plan 2 with a large balance (£40,000+) and average earnings — you'll likely never repay in full, so extra payments just reduce the amount written off
You have higher-interest debt (credit cards, personal loans) — pay those first
You don't have an emergency fund — liquidity matters more than student loan optimisation
You could invest the money for potentially higher returns (pensions with tax relief are often a better use of spare cash)

The Martin Lewis Rule of Thumb

If you won't repay your student loan in full within the write-off period based on current income projections, voluntary overpayments are essentially wasted money — you'd have paid the same total through payroll deductions regardless.

How Student Loans Appear on Your Payslip

Student loan repayments are deducted through PAYE (Pay As You Earn), just like National Insurance and income tax. Your payslip will show:

SL1 — Plan 1 deduction
SL2 — Plan 2 deduction
SL4 — Plan 4 deduction
SL5 — Plan 5 deduction
PGL — Postgraduate Loan deduction

Repayments only start in the April after you graduate (or leave your course). If you started a job in October after graduating in June, repayments begin the following April.

Student Loans and Your Credit Score

Student loans do not appear on your credit report and do not affect your credit score. However, lenders are aware of them:

Mortgage applications: Lenders ask about student loan repayments as part of affordability checks. The monthly deduction reduces your disposable income, which may slightly reduce the amount you can borrow.
Credit cards/loans: Most lenders don't ask about student loans specifically, but the reduced net income may affect affordability calculations.

Use our salary calculator to see exactly how student loan repayments affect your take-home pay. You can also check how pension contributions interact with student loans — increasing pension contributions reduces your gross income, which can reduce student loan repayments.