Student Loan Repayment Guide 2026/27: Thresholds, Rates & How Much You Actually Repay
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Key Insight
Student loan repayments are 9% of income above your plan's threshold — not 9% of your whole salary. On a £30,000 salary with Plan 2, you repay just £20.38/month (£244/year). If you have both an undergraduate and postgraduate loan, you could be paying 15% of income above the thresholds.
Student loan repayments are one of the most misunderstood deductions on a UK payslip. Many graduates are surprised to learn that repayments are not fixed monthly amounts — they are calculated as a percentage of your income above a specific threshold, deducted automatically through PAYE alongside your tax and National Insurance. In this guide, we cover every student loan plan for the 2026/27 tax year (6 April 2026 to 5 April 2027), explain how much you will actually repay, and show you how to check which plan you are on.
How Student Loan Repayments Work
Unlike a mortgage or personal loan, student loan repayments in the UK are income-contingent. You only repay when your income exceeds a set threshold, and the amount you repay is proportional to how much you earn above that threshold — not the total amount you borrowed.
Repayments are collected through PAYE by your employer if you are employed, or through self-assessment if you are self-employed. The Student Loans Company (SLC) tells HMRC which plan you are on, and HMRC passes this to your employer via a Start Notice (SL1 or SL2). Your employer then applies the correct deduction each pay period — read our guide on how your employer calculates deductions through PAYE.
Key points to understand:
- Repayments are not voluntary — they are a statutory deduction once you exceed the threshold
- You repay based on what you earn, not what you owe
- Outstanding balances are written off after a set period (typically 25–40 years depending on your plan)
- Interest accrues on your balance, but this does not affect your monthly repayment amount
Student Loan Plans & Thresholds for 2026/27
There are five student loan plans currently in operation. The plan you are on depends on when and where you studied:
| Plan | Who It Applies To | Annual Threshold | Rate |
|---|---|---|---|
| Plan 1 | English & Welsh students who started before September 2012, or Northern Irish students | £26,065 | 9% |
| Plan 2 | English & Welsh students who started after September 2012 | £27,295 | 9% |
| Plan 4 | Scottish students (loans from SAAS) | £32,745 | 9% |
| Plan 5 | English & Welsh students starting from September 2023 onwards | £25,000 | 9% |
| Postgraduate | Postgraduate Master's or Doctoral loan recipients | £21,000 | 6% |
Important: The Plan 2 threshold has been frozen at £27,295 since 2023, and it is expected to remain frozen until at least 2027. The Plan 5 threshold of £25,000 is also frozen. These freezes are part of the government's fiscal strategy and mean that as wages grow, more graduates cross the repayment thresholds — effectively increasing the amount repaid over time.
How Much Will You Actually Repay Each Month?
The monthly repayment amount is straightforward to calculate. Take your gross annual salary, subtract the annual threshold, multiply by the repayment rate, and divide by 12.
Here are examples for each plan at a salary of £35,000:
| Plan | Salary − Threshold | Annual Repayment | Monthly |
|---|---|---|---|
| Plan 1 | £35,000 − £26,065 = £8,935 | £804 | £67/mo |
| Plan 2 | £35,000 − £27,295 = £7,705 | £693 | £58/mo |
| Plan 4 | £35,000 − £32,745 = £2,255 | £203 | £17/mo |
| Plan 5 | £35,000 − £25,000 = £10,000 | £900 | £75/mo |
| Postgraduate | £35,000 − £21,000 = £14,000 | £840 | £70/mo |
If you have both an undergraduate and a postgraduate loan, you repay both simultaneously — 9% above your undergraduate threshold plus 6% above the postgraduate threshold. On a £35,000 salary with Plan 2 and a Postgraduate loan, that totals £128 per month in combined repayments.
When Are Student Loans Written Off?
Student loans in the UK are not like commercial debt — they are eventually written off regardless of how much you still owe. The write-off periods are:
- Plan 1: Written off when you turn 65, or 25 years after the April following graduation (whichever comes first)
- Plan 2: Written off 30 years after the April following graduation
- Plan 4: Written off 30 years after the April following graduation (was 35 years, reduced in 2021)
- Plan 5: Written off 40 years after the April following graduation
- Postgraduate: Written off 30 years after the April following graduation
This is critically important: the majority of Plan 2 borrowers will never fully repay their loan. Government projections estimate that only around 25% of Plan 2 borrowers will clear their balance before write-off. This means making voluntary overpayments is often a poor financial decision unless you are confident you will repay in full.
Interest Rates on Student Loans
Interest rates vary by plan and have changed significantly in recent years:
- Plan 1 & Plan 4: The lower of RPI (Retail Prices Index) or Bank of England base rate + 1%
- Plan 2: RPI while studying, then RPI + up to 3% depending on income (graduates earning over £49,130 pay RPI + 3%)
- Plan 5: RPI only (no additional margin — a key difference from Plan 2)
- Postgraduate: RPI + 3%
With RPI running at levels well above the Bank of England target in recent years, Plan 2 balances in particular have grown significantly. However, remember: because the loan is written off after 30 years, the actual balance may never matter for most borrowers. The interest rate effectively determines how quickly high earners repay, not how much lower and middle earners ultimately pay.
Should You Make Voluntary Repayments?
This is one of the most common questions graduates ask. The answer depends on whether you will repay your loan in full before write-off:
- DO NOT overpay if you will not clear the balance before write-off — Any extra payments are effectively wasted money, since the remaining balance would have been written off anyway.
- CONSIDER overpaying if you will clear the balance — If your projected repayments over the remaining years exceed your outstanding balance, overpaying can save you interest.
- High earners on Plan 1 or Plan 4 — These plans have lower interest rates and lower starting balances, making full repayment more likely. Overpaying may make sense.
Use the Student Loans Company's online account to check your current balance. Then use our salary calculator to estimate your annual repayments and project whether you will clear the loan before write-off.
How to Check Which Plan You Are On
If you are unsure which plan applies to you, here is how to find out:
- Log in to your Student Loans Company account at gov.uk/sign-in-to-manage-your-student-loan-balance. Your plan type will be shown alongside your balance.
- Check your payslip — Your employer should show the student loan deduction and the plan type (e.g., “SL1” for Plan 1, “SL2” for Plan 2).
- Contact the Student Loans Company on 0300 100 0611 if you still cannot determine your plan.
Avoiding Overpayment When You've Finished Repaying
A surprisingly common issue: graduates continue to have student loan deductions taken from their salary even after the loan is fully repaid. This happens because there is a delay between the SLC updating your balance and HMRC removing the deduction notice from your employer.
To avoid this, monitor your balance closely as it approaches zero. If you are within 2–3 months of full repayment, consider switching to direct debit repayments instead of PAYE to maintain exact control. If you do overpay, you can claim a refund from the SLC — but it can take 4–8 weeks to process.
Student Loans and Pension Contributions
An important interaction that many graduates overlook: if you contribute to a workplace pension via salary sacrifice, your gross salary is reduced before student loan repayments are calculated. This means you repay less on your student loan — an additional benefit of salary sacrifice beyond the Income Tax and NI savings.
For example, on a £35,000 salary with 5% (£1,750) salary sacrifice pension on Plan 2:
- Without pension sacrifice: (£35,000 − £27,295) × 9% = £693/year
- With pension sacrifice: (£33,250 − £27,295) × 9% = £536/year
- Annual saving: £157 less in student loan repayments
However, if you will repay the loan in full, reducing your repayments simply extends the repayment period and increases the total interest paid. For those who will not repay in full, the lower repayments are a genuine saving. For more details, see our pension tax relief guide.
Case Study: Sophie, a Primary School Teacher in London on £36,413 with a Plan 2 Loan
Sophie is a 27-year-old primary school teacher in outer London. She graduated in 2021 with a Plan 2 student loan balance of £48,000, which has grown to approximately £54,200 with interest by 2026. Her teaching salary as a Main Pay Scale teacher (M4, inner London fringe) is £36,413.
With the Plan 2 repayment threshold at £27,295, Sophie repays 9% of her earnings above this threshold. Her annual student loan deduction is 9% × (£36,413 − £27,295) = £820.62, which equates to £68.39 per month taken directly from her payslip through PAYE.
Sophie also contributes 7.4% to the Teachers' Pension Scheme, which is a net pay arrangement. Her pension contribution is £2,695 per year. However, unlike salary sacrifice, the Teachers' Pension does not reduce her income for student loan purposes — student loan repayments are calculated on gross earnings before pension deductions.
Including Income Tax (£4,769), National Insurance (£1,907), pension (£2,695), and her Plan 2 student loan (£821), Sophie's total annual deductions come to £10,192. From her £36,413 gross salary, her annual take-home pay is approximately £26,221, or £2,185 per month.
Sophie considered making voluntary overpayments to clear her loan faster. However, after reviewing her balance and projected salary growth, she calculated that she would likely not repay the full balance within the 30-year write-off window. Making voluntary overpayments in this scenario would mean paying money she would never need to repay — effectively throwing it away. For most teachers on moderate salaries with Plan 2 loans, the financially optimal strategy is to make minimum repayments and let the remainder be written off. Sophie used our calculator to model these scenarios and confirm her decision.
Model Your Repayments with Our Calculator
Our UK Salary Calculator includes full support for all five student loan plans. Select your plan from the dropdown, enter your gross salary, and the calculator will show you exactly how much is deducted each month — alongside your Income Tax, National Insurance, and pension contributions.
You can also model the impact of a pay rise or bonus on your student loan repayments, compare the effect of salary sacrifice pension contributions, and see your complete take-home pay broken down by annual, monthly, weekly, daily, and hourly amounts. For more ideas, explore our guide on strategies for maximising your take-home pay.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Student loan thresholds and rates are set by the government and can change. Always verify your loan details at GOV.UK or through the Student Loans Company. Consult a qualified financial adviser for personal guidance.