Student Loan Repayments Explained: A Complete UK Guide
- Revision Notes
- Jul 31
- 17 min read
Updated: Aug 14
Student loan repayments work differently from repayments on most other types of borrowing.
You are not normally given a fixed monthly bill based on the amount you owe. Instead, compulsory repayments are linked to your income. You repay only when your earnings are above the threshold for your repayment plan.
This means:
You do not usually repay anything while earning below the threshold.
Your repayments rise when your income rises.
Your repayments fall or stop when your income falls.
The amount deducted is not normally based on the size of your outstanding balance.
Any eligible balance remaining at the end of the repayment period is written off.
This guide explains the UK student loan repayment system, including the thresholds applying from 6 April 2026 to 5 April 2027.
Important: Repayment thresholds and interest rates can change. Always check your online Student Loans Company account and the latest official guidance before making financial decisions.
When Do Student Loan Repayments Begin?
You do not normally begin repaying while you are studying.
Most students become eligible to enter repayment from the April after they finish or leave their course. However, money is only deducted once their income exceeds the threshold for their repayment plan.
For example, a student who completes their degree in June 2029 would normally become eligible to repay from April 2030.
If they earn below their plan’s threshold, their compulsory repayment would still be £0.
You remain responsible for eligible student loans even if you:
Leave university without graduating
Change course
Transfer university
Repeat a year
Suspend your studies
Move abroad
Tuition Fee and Maintenance Loans already paid are not cancelled simply because you do not complete your course.
Which Student Loan Repayment Plan Are You On?
Your repayment plan determines:
When repayments begin
The income threshold
The percentage you repay
How interest is calculated
When the remaining balance is written off
You do not usually choose your repayment plan. It is based mainly on where you normally lived when you applied for student finance, when your course began and the type of course you studied.
Student Finance England
You will usually be on:
Course details | Repayment plan |
Undergraduate course beginning on or after 1 August 2023 | Plan 5 |
Undergraduate course beginning from 1 September 2012 to 31 July 2023 | Plan 2 |
Undergraduate course beginning before 1 September 2012 | Plan 1 |
Eligible postgraduate master’s or doctoral course | Postgraduate Loan plan |
Loans issued through the new Lifelong Learning Entitlement will generally follow Plan 5 repayment rules.
Student Finance Wales
Students who applied through Student Finance Wales will usually be on:
Course details | Repayment plan |
Undergraduate course beginning on or after 1 September 2012 | Plan 2 |
Undergraduate course beginning before 1 September 2012 | Plan 1 |
Eligible postgraduate master’s or doctoral course | Postgraduate Loan plan |
Student Awards Agency Scotland
Students who applied through the Student Awards Agency Scotland are generally on Plan 4, whether they studied an undergraduate or postgraduate course.
Student Finance Northern Ireland
Students who applied through Student Finance Northern Ireland are generally on Plan 1, including undergraduate and postgraduate students.
How Can You Check Your Repayment Plan?
Sign in to your student loan repayment account and download your active plan type letter.
You should compare this with the repayment plan being used by your employer.
If your employer is using the wrong plan:
Show the active plan type letter to your payroll department.
Ask them to update your payroll record.
Check whether you have overpaid.
Apply to the Student Loans Company for a refund if appropriate.
Using the wrong plan can result in too much or too little being deducted from your salary.
Student Loan Repayment Thresholds for 2026/27
The following thresholds apply from 6 April 2026 to 5 April 2027:
Repayment plan | Annual threshold | Monthly threshold | Weekly threshold | Repayment rate |
Plan 1 | £26,900 | £2,241.66 | £517.30 | 9% |
Plan 2 | £29,385 | £2,448.75 | £565.09 | 9% |
Plan 4 | £33,795 | £2,816.25 | £649.90 | 9% |
Plan 5 | £25,000 | £2,083.33 | £480.76 | 9% |
Postgraduate Loan | £21,000 | £1,750 | £403.84 | 6% |
The threshold is the amount you can earn before repayments begin. It is not the amount you repay.
How Are Student Loan Repayments Calculated?
For Plans 1, 2, 4 and 5, you repay:
9% of your income above the relevant threshold
You do not repay 9% of your entire salary.
For a Postgraduate Loan, you repay:
6% of your income above £21,000
Plan 5 example
Suppose you earn £35,000 and are on Plan 5.
Annual income: £35,000
Plan 5 threshold: £25,000
Income above the threshold: £10,000
Repayment rate: 9%
Approximate annual repayment: £900
Approximate monthly repayment: £75
The £25,000 below the threshold is not included in the calculation.
Plan 5 Repayment Examples
Plan 5 applies to most new English undergraduate students whose courses began on or after 1 August 2023.
Annual salary | Income above £25,000 | Approximate annual repayment | Approximate monthly repayment |
£25,000 | £0 | £0 | £0 |
£28,000 | £3,000 | £270 | £22.50 |
£30,000 | £5,000 | £450 | £37.50 |
£35,000 | £10,000 | £900 | £75 |
£40,000 | £15,000 | £1,350 | £112.50 |
£50,000 | £25,000 | £2,250 | £187.50 |
£60,000 | £35,000 | £3,150 | £262.50 |
Official payroll deductions may differ slightly because employers calculate repayments for each individual pay period and round the result down to the nearest pound.
How Much Would You Repay on Each Plan?
The repayment plan can make a significant difference because each one has a different threshold.
The following examples show approximate monthly repayments based on a steady annual salary:
Annual salary | Plan 1 | Plan 2 | Plan 4 | Plan 5 | Postgraduate Loan |
£25,000 | £0 | £0 | £0 | £0 | £20 |
£30,000 | £23 | £5 | £0 | £38 | £45 |
£35,000 | £61 | £42 | £9 | £75 | £70 |
£40,000 | £98 | £80 | £47 | £113 | £95 |
£50,000 | £173 | £155 | £122 | £188 | £145 |
£60,000 | £248 | £230 | £197 | £263 | £195 |
These figures are estimates. Actual deductions depend on your pay frequency and the income received during each pay period.
Are Repayments Based on Monthly or Annual Income?
For employees, deductions are usually calculated each time they are paid.
This might be:
Weekly
Fortnightly
Every four weeks
Monthly
Your employer compares your income for that pay period with the corresponding weekly or monthly threshold.
This means you could have a repayment deducted in a particularly well-paid month even if your total income for the full tax year remains below the annual threshold.
Example involving overtime
Suppose you are on Plan 5 and normally earn £2,000 per month.
This is below the monthly threshold of £2,083.33, so you would not normally make a repayment.
One month, you receive overtime and your gross pay rises to £2,500.
Your approximate repayment would be calculated as follows:
Monthly income: £2,500
Monthly threshold: £2,083.33
Income above the threshold: £416.67
9% of £416.67: approximately £37.50
Your employer would normally deduct £37 after payroll rounding.
A deduction can therefore be correct for that month even if you usually earn below the threshold.
What Happens If Your Annual Income Is Below the Threshold?
You may be entitled to a refund if:
Repayments were deducted during one or more high-paid months
Your total income for the completed tax year remained below the annual threshold for your plan
You normally need to wait until the tax year has ended and HM Revenue and Customs has confirmed your annual income before requesting the refund.
For example, you might receive a student loan deduction after:
Working overtime
Receiving a bonus
Starting a new job
Receiving holiday pay
Being paid for unused leave
Receiving several weeks of pay together
If your total annual income was still below the threshold, check whether you can reclaim the deductions.
What Income Is Used to Calculate Repayments?
For employees, repayments are normally calculated using earnings that are subject to Class 1 National Insurance contributions.
This can include:
Salary
Wages
Bonuses
Overtime
Commission
Statutory sick pay
Statutory parental pay
Certain other taxable employment payments
The calculation is based on income before Income Tax and National Insurance are deducted.
However, student loan repayments do not reduce the amount of income on which your tax and National Insurance are calculated.
How Are Repayments Collected If You Are Employed?
If you are employed, repayments are usually taken automatically through PAYE.
Your employer deducts them alongside:
Income Tax
National Insurance
Workplace pension contributions
Other payroll deductions
The student loan deduction should appear separately on your payslip.
Your employer sends the money to HM Revenue and Customs, which passes the repayment information to the Student Loans Company.
You should keep:
Payslips
P60 forms
P45 forms
Student loan statements
These can help you identify incorrect deductions or support a refund request.
What Should You Tell a New Employer?
When starting a job, you may be asked to complete a starter checklist.
You should accurately state:
Whether you have a student loan
Whether you are already making repayments
Which repayment plan you are on
Whether you also have a Postgraduate Loan
Providing incorrect information could result in repayments being delayed or deducted under the wrong plan.
You can check your plan through your online Student Loans Company account before completing the form.
How Do Self-Employed Graduates Repay?
If you are self-employed, student loan repayments are calculated through Self Assessment.
HM Revenue and Customs uses information from your tax return to calculate the amount due. You normally pay it at the same time as your tax bill.
Relevant income can include:
Self-employed profits
Employment income
Certain unearned income
Income from savings
Income from property
Some investment income
Different rules can apply depending on the amount and type of additional income, so complete the student loan section of your tax return carefully.
What if you are employed and self-employed?
Your employer may already deduct repayments through PAYE.
When completing your tax return, enter the student loan deductions shown on your P60 or payslips. HM Revenue and Customs should take these payments into account when calculating the remaining amount due.
What Happens If You Have More Than One Job?
Student loan deductions are normally assessed separately for each employment.
For example, suppose you are on Plan 5 and earn:
£1,500 per month from Job A
£1,000 per month from Job B
Your combined monthly income is £2,500, which is above the Plan 5 monthly threshold.
However, neither individual job pays more than £2,083.33 per month. Therefore, neither employer would normally make a student loan deduction.
The treatment may be different if the jobs are with the same employer and the earnings are aggregated for National Insurance purposes. Self Assessment can also affect the final amount due if you have additional taxable income.
What Happens If You Have More Than One Student Loan Plan?
Some borrowers have loans under more than one undergraduate repayment plan.
For example, you might have:
A Plan 1 loan from an earlier course
A Plan 2 loan from a later course
You do not normally repay 9% separately for every undergraduate plan.
Instead, you generally repay 9% of your income above the lowest applicable threshold. The repayment is then allocated between your loan balances.
Example: Plan 1 and Plan 2
For 2026/27:
Plan 1 threshold: £26,900
Plan 2 threshold: £29,385
If you have both plans, repayments normally begin when your income exceeds the lower Plan 1 threshold.
Your employer should use the plan instructed by HM Revenue and Customs or shown by your active plan information.
Can You Repay an Undergraduate and Postgraduate Loan Together?
Yes.
If you have an undergraduate loan and a Postgraduate Loan, both repayments can be deducted at the same time.
You repay:
9% above the threshold for your undergraduate plan
6% above the £21,000 Postgraduate Loan threshold
Example: Plan 2 and Postgraduate Loan
Suppose your annual salary is £40,000.
Your approximate Plan 2 repayment is:
£40,000 minus £29,385
£10,615 above the threshold
9% of £10,615
Approximately £955 per year
Your Postgraduate Loan repayment is:
£40,000 minus £21,000
£19,000 above the threshold
6% of £19,000
£1,140 per year
Your combined approximate repayment is:
£2,095 per year
Around £175 per month
The two parts are calculated separately because they use different rates and thresholds.
What Happens When Your Income Falls?
Your repayment should automatically fall when your pay falls.
If your income drops below the relevant weekly or monthly threshold, deductions should stop. They may restart if your pay later rises above the threshold.
This can happen if you:
Change to a lower-paid job
Reduce your working hours
Take parental leave
Take unpaid leave
Lose your job
Take a career break
Return to education
Become unable to work
You do not normally need to make fixed payments from savings while your income is below the threshold.
However, separate rules apply to student finance overpayments and arrears.
What Happens During Maternity or Parental Leave?
Repayments are based on the income you receive during each pay period.
If statutory or contractual parental pay keeps your income above the threshold, a deduction may still be taken.
If your income falls below the threshold, repayments should stop.
Your outstanding loan remains on your account, and interest may continue to be added according to your plan.
What Happens If You Leave the UK?
Moving abroad does not cancel your student loan.
You must update the Student Loans Company if you leave the UK for more than three months, including if you:
Move permanently
Work overseas
Travel for an extended period
Volunteer abroad
Study in another country
Overseas repayment thresholds vary according to the country where you live. They are adjusted to reflect differences in living costs.
You may need to provide evidence of:
Employment
Salary
Self-employment
Benefits
Financial support
Study
Unemployment
If you do not supply the information requested, the Student Loans Company may charge a fixed monthly amount. You could also build up arrears that remain payable even if your actual income was below the relevant threshold.
You should update your employment details again when you return to the UK after spending more than three months abroad.
Do Student Loan Repayments Affect Your Credit Score?
Income-contingent student loans do not normally appear on your credit report in the same way as credit cards, personal loans or missed mortgage payments.
The outstanding balance does not therefore directly lower your credit score.
However, repayments reduce your monthly take-home pay. A mortgage or other lender may consider this when assessing affordability.
The lender may ask:
Whether you have a student loan
Which plan you are on
How much is deducted each month
What your income is after deductions
The effect is usually through affordability rather than your credit history.
Do Repayments Reduce Your Taxable Income?
No.
Student loan deductions are calculated using relevant gross income, but they do not reduce the earnings used to calculate Income Tax or National Insurance.
For example, making a £75 student loan repayment does not reduce your taxable salary by £75.
Student loan repayments are a separate payroll deduction.
What Happens to Interest While You Repay?
Interest continues to be added until the loan is:
Repaid in full
Written off
Cancelled under an eligible rule
The interest rate depends on your repayment plan.
Interest affects the size of your outstanding balance, but it does not normally change the percentage of income deducted from your salary.
For example, two Plan 5 graduates earning the same salary will normally make the same compulsory repayment even if one owes £20,000 and the other owes £70,000.
The balance becomes particularly important when deciding whether you are likely to clear the loan before its write-off date.
Read How Student Loans Work for a fuller explanation of interest and loan balances.
When Are Student Loans Written Off?
Write-off rules depend on the repayment plan and, for some older loans, the date on which the first payment was made.
Repayment plan | Normal write-off rule |
Plan 1, first loan paid on or after 1 September 2006 | 25 years after the April you first became due to repay |
Plan 1, first loan paid before 1 September 2006 | When you reach age 65 |
Plan 2 | 30 years after the April you first became due to repay |
Plan 4, first loan paid on or after 1 August 2007 | 30 years after the April you first became due to repay |
Plan 4, first loan paid before 1 August 2007 | At age 65 or 30 years after becoming due to repay, whichever comes first |
Plan 5 | 40 years after the April you first became due to repay |
Postgraduate Loan from England or Wales | 30 years after the April you first became due to repay |
Plan 5 example
Suppose you complete university in summer 2029 and first become due to repay in April 2030.
Your Plan 5 write-off date would normally be 40 years later, in 2070.
You might clear the balance earlier if your income and repayments are high enough. Otherwise, any eligible amount remaining at the end of the repayment period would normally be cancelled.
Can a Student Loan Be Cancelled Earlier?
The Student Loans Company will normally cancel a borrower’s student loan if they die.
A loan may also be cancelled in certain circumstances if the borrower is permanently unable to work because of illness or disability and receives qualifying disability benefits. Evidence is required.
Temporary illness, unemployment or reduced working hours do not normally cancel the loan. Instead, repayments stop or reduce when income falls below the relevant threshold.
What Is a Student Finance Overpayment?
A student finance overpayment occurs when you receive more funding than you were entitled to.
This can happen if you:
Leave your course
Suspend your studies
Change your living arrangements
Change course
Receive funding covering a period when you were no longer attending
Provide incorrect information
An overpayment is not treated in the same way as the ordinary income-contingent loan balance.
You may be required to repay it separately, even if your income is below the normal student loan threshold.
Contact the Student Loans Company immediately if you are told that you have been overpaid. If you cannot pay the amount at once, ask whether a repayment arrangement is available.
Can You Get a Student Loan Refund?
You may be entitled to a refund if:
Your annual income was below the threshold.
Your employer used the wrong repayment plan.
You began repaying before you were due to.
Deductions continued after the loan had been repaid.
You made repayments after the balance should have been cleared.
An administrative error caused you to overpay.
The Student Loans Company’s refund service covers these main situations.
Refund after earning below the threshold
You can generally request this only after the tax year has ended and your annual earnings have been confirmed.
Refund after using the wrong plan
Check your active plan type letter and compare it with your payslips.
Refund after repaying too early
Repayments should not normally begin before the April after you finish or leave your course.
Refund after clearing the balance
Check whether payroll deductions continued after the amount had been repaid.
A refund restores money taken unnecessarily, but it can also increase the outstanding student loan balance where the original repayment had already been applied to the account.
What If You Have Loans on Several Plans?
If you are repaying a combination of Plans 1, 2 and 4, a below-threshold refund may only be available when your annual income was below the lowest threshold applying to your loans.
For example, if you have Plan 1 and Plan 2 loans:
Plan 1 threshold: £26,900
Plan 2 threshold: £29,385
You may only qualify for a full below-threshold refund if your annual income was below £26,900, the lower threshold.
How Can You Avoid Overpaying Near the End?
Payroll information does not always move between employers, HM Revenue and Customs and the Student Loans Company instantly.
This means deductions could continue briefly after your balance has been cleared.
When you enter the final year of repayment, the Student Loans Company may contact you about switching from PAYE deductions to Direct Debit.
Paying by Direct Debit near the end allows the Student Loans Company to control the final payments more precisely and reduces the risk of paying more than you owe.
Keep your:
Email address
Telephone number
Postal address
Employment information
up to date so that the Student Loans Company can contact you.
Can You Make Voluntary Repayments?
Yes. You can make additional payments towards part or all of your balance at any time.
There is no early repayment penalty.
Voluntary repayments can normally be made through:
Your online account
Debit card
Bank transfer
Direct Debit
Cheque
However, making an additional payment does not normally reduce the percentage automatically deducted from your salary. Compulsory repayments continue until the balance is cleared.
Should You Repay Your Student Loan Early?
Early repayment is not automatically the best option.
It may be worth considering if you:
Have a relatively small balance
Are a high earner
Expect your income to remain high
Are likely to repay the full balance before it is written off
Have no expensive borrowing
Have sufficient emergency savings
It may be less beneficial if you:
Are unlikely to repay the full balance
Expect long periods below the threshold
Would reach the write-off date with a balance remaining
Have credit card or overdraft debt
Need an emergency fund
Are saving for a house deposit
Would need to use most of your savings
Voluntary payments are generally not refundable simply because you later decide the payment was unnecessary.
Consider the loan plan, remaining term, balance, interest rate and expected career income before making a substantial overpayment.
Does a Larger Loan Mean Larger Monthly Repayments?
No, not under the standard income-contingent calculation.
Suppose two graduates are both on Plan 5 and earn £35,000:
Graduate A owes £25,000.
Graduate B owes £75,000.
Both would normally make compulsory repayments of approximately £75 per month.
The difference is that Graduate A may clear the balance sooner. Graduate B may continue repaying for longer or reach the write-off date with some of the balance remaining.
The amount borrowed affects the length and total cost of repayment, but not normally the income-based monthly deduction.
Do Grants, Bursaries and Scholarships Need to Be Repaid?
You do not normally repay:
University bursaries
Scholarships
Disabled Students’ Allowance
Certain government grants
Other non-repayable student support
However, you may have to return money if:
You were overpaid.
You were not eligible.
You supplied inaccurate information.
You stopped meeting the conditions of the award.
You left your course during the funded period.
The standard student loan repayment system mainly covers Tuition Fee Loans, Maintenance Loans and eligible postgraduate loans.
Read Scholarships vs Bursaries for more information about non-repayable funding.
Common Student Loan Repayment Mistakes
Thinking you repay 9% of your full salary
You repay 9% only of income above the threshold for Plans 1, 2, 4 and 5.
Assuming repayments are based on the loan balance
Compulsory repayments are mainly based on income and repayment plan.
Ignoring your payslips
Check that deductions have started at the correct time and use the right plan.
Not claiming a refund
You may have paid too much because of bonuses, overtime, an incorrect plan or early deductions.
Forgetting to tell the Student Loans Company about moving abroad
You must update your details if you leave the UK for more than three months.
Confusing an overpayment with the ordinary loan
A student finance overpayment may need to be repaid separately, without the normal income threshold.
Assuming the loan disappears if you leave university
Eligible funding already paid remains repayable.
Making a large voluntary payment without checking the write-off date
Some borrowers may repay money towards a balance that would otherwise have been cancelled.
Forgetting about a Postgraduate Loan
Undergraduate and postgraduate deductions can be taken simultaneously.
Using the wrong plan when starting a job
Check your active plan type letter before completing a starter checklist.
Student Loan Repayment Checklist
When leaving university
Check which repayment plan you are on.
Confirm when you become due to repay.
Update your contact details.
Keep your Student Loans Company login information.
Check your outstanding balance.
When starting a job
Complete the starter checklist accurately.
Tell your employer your repayment plan.
Declare any Postgraduate Loan.
Check your first payslips.
Keep your P60 and P45.
While making repayments
Review deductions regularly.
Compare your employer’s plan with your active plan letter.
Check whether bonuses or overtime caused deductions.
Request a refund if eligible.
Update your employment details when required.
Tell the Student Loans Company before moving abroad.
Near the end of repayment
Check your current balance.
Keep your contact information updated.
Respond when the Student Loans Company contacts you.
Consider switching to Direct Debit.
Check that PAYE deductions stop at the correct time.
Frequently Asked Questions About Student Loan Repayments
How much do you earn before repaying a student loan?
For 2026/27, the annual thresholds are:
£26,900 for Plan 1
£29,385 for Plan 2
£33,795 for Plan 4
£25,000 for Plan 5
£21,000 for a Postgraduate Loan
How much do you repay each month?
Plans 1, 2, 4 and 5 require repayment of 9% of income above the relevant threshold. Postgraduate Loans require 6% of income above £21,000.
Do repayments begin immediately after graduation?
No. You normally become eligible to repay from the April after you finish or leave your course. Deductions are only made when your income exceeds the threshold.
What happens if I earn below the threshold?
You do not normally make compulsory repayments. If your income falls below the threshold after deductions have begun, they should stop.
What happens if my salary increases?
Your repayment normally increases automatically because more of your income is above the threshold.
What happens if I lose my job?
PAYE deductions stop when you stop receiving earnings above the threshold. You are not normally required to continue making fixed monthly repayments while unemployed.
Can I pause repayments?
You do not usually apply for a formal repayment pause. Compulsory repayments automatically reduce or stop when your income falls below the threshold.
Does interest stop when repayments stop?
No. Interest may continue to be added according to the rules of your plan.
Can student loan repayments be refunded?
Yes, in circumstances including earning below the annual threshold, being placed on the wrong plan, repaying too early or paying after the balance was cleared.
Do I repay more if I borrowed more?
Not necessarily each month. Compulsory repayments are based on income rather than the balance.
Can I repay early?
Yes. There is no early repayment penalty, but early repayment is not financially beneficial for every borrower.
Do student loans affect mortgages?
They do not normally appear as conventional debt on your credit report, but lenders may consider the monthly deduction when assessing affordability.
What happens if I move abroad?
You must inform the Student Loans Company if you leave the UK for more than three months. Your repayment will be calculated using the threshold for the country where you live.
When is a Plan 5 loan written off?
A Plan 5 loan is normally written off 40 years after the April in which you first became due to repay.
Can I make repayments while earning below the threshold?
Yes. You can make voluntary payments, but you are not normally required to do so.
Is a Maintenance Loan repaid separately?
No. Tuition Fee and Maintenance Loans under the same undergraduate plan are normally combined into one balance and repaid through the same deduction.
Final Thoughts on Student Loan Repayments
Student loan repayments may look complicated, but the central principle is simple:
You repay according to your income, not simply according to how much you borrowed.
For most borrowers:
Repayments begin only above the relevant threshold.
Plans 1, 2, 4 and 5 take 9% of income above that threshold.
Postgraduate Loans take 6% above £21,000.
Deductions usually happen automatically through payroll.
Repayments stop when income falls below the threshold.
Remaining eligible balances are eventually written off.
Refunds may be available when too much has been deducted.
Check your repayment plan, monitor your payslips and keep your Student Loans Company account up to date. These simple steps can help you avoid incorrect deductions and understand exactly what will happen after university.
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