UK Student Loan Repayments: Plan 1 vs Plan 2 Explained (2025)

Student loan repayments for 2025/26 are calculated at 9% of income above your plan's threshold. Someone on Plan 2 earning £35,000 pays just £49/month: their salary is £6,530 above the £28,470 threshold, so £6,530 × 9% = £588/year or £49/month. You only repay on income above the threshold, not your entire salary.

However, graduates with both undergraduate and postgraduate loans face combined deductions of up to 15% (9% + 6%). At £45,000 salary with Plan 2 + Postgraduate loans, you'll pay £1,488 undergraduate + £1,440 postgraduate = £2,928/year (£244/month total) - a significant monthly expense that reduces take-home pay and affects mortgage affordability.

This guide explains all UK student loan plans (Plan 1, 2, 4, 5, and Postgraduate), shows you exactly how much you'll repay at different salaries, and clarifies when loans are written off.

How Student Loan Repayments Work

You repay 9% of income above your plan's threshold (or 6% for Postgraduate loans). Repayments are deducted automatically via PAYE for employed workers, alongside income tax and National Insurance.

Key principles:

You only pay on income above the threshold (not your entire salary)
Repayments are automatic (deducted monthly from salary)
Different plans have different thresholds (£21,000 to £32,745)
Multiple loans are repaid simultaneously (both deduct from same salary)
Loans are written off after 25-40 years (plan-dependent)

Repayments start: April after you leave or complete your course (not graduation date). If you finish in June 2024, repayments begin April 2025.

Calculate Your Student Loan Repayments →

All UK Student Loan Plans Explained (2025/26)

Five student loan plan types exist in the UK, each with different thresholds, rates, and write-off periods:

Plan Type	Threshold	Repayment Rate	Interest Rate	Write-Off Period	Who Qualifies
Plan 1	£26,065	9%	3.2% (RPI or BR+1%)	25 years	Pre-2012 England/Wales, All NI
Plan 2	£28,470	9%	3.2-6.2% (income-based)	30 years	2012-2023 England/Wales
Plan 4	£32,745	9%	3.2% (RPI or BR+1%)	30 years	All Scottish students
Plan 5	£25,000	9%	3.2% (RPI only)	40 years	2023+ England starters
Postgraduate	£21,000	6%	6.2% (RPI+3%)	30 years	Masters/PhD England/Wales

Which Plan Am I On?

Plan 1:

Started university before September 2012 in England or Wales
OR all Northern Ireland students (regardless of start year)

Plan 2:

Started university between September 2012 and July 2023 in England or Wales

Plan 4:

Scottish students (any start year from 1998 onwards)

Plan 5:

Started university from August 2023 onwards in England

Postgraduate Loan:

Masters or Doctoral course from 2016+ (Masters) or 2018+ (Doctoral) in England or Wales

Important: Your plan is based on where you lived when you applied for student finance, not where you study or work now.

Not sure which plan? Check your annual student loan statement or log into your Student Loan Company account.

How Repayments Are Calculated (Step-by-Step Examples)

Example 1: Plan 1 - £30,000 Salary

Threshold: £26,065 Income above threshold: £30,000 - £26,065 = £3,935 Annual repayment: £3,935 × 9% = £354 Monthly repayment: £354 ÷ 12 = £30

Calculation check:

You earn £2,500/month
Threshold is £2,172/month
Above threshold: £328/month
Repayment: £328 × 9% = £30/month ✓

Example 2: Plan 2 - £35,000 Salary

Threshold: £28,470 Income above threshold: £35,000 - £28,470 = £6,530 Annual repayment: £6,530 × 9% = £588 Monthly repayment: £588 ÷ 12 = £49

Example 3: Plan 4 (Scotland) - £40,000 Salary

Threshold: £32,745 (highest threshold!) Income above threshold: £40,000 - £32,745 = £7,255 Annual repayment: £7,255 × 9% = £653 Monthly repayment: £653 ÷ 12 = £54

Scottish graduates with Plan 4 have the highest threshold (£32,745), so they start repaying later and pay less at the same salary compared to other plans.

Example 4: Plan 5 - £30,000 Salary

Threshold: £25,000 (lowest threshold!) Income above threshold: £30,000 - £25,000 = £5,000 Annual repayment: £5,000 × 9% = £450 Monthly repayment: £450 ÷ 12 = £37.50

Plan 5 graduates (2023+ starters) have the lowest threshold and longest write-off period (40 years), meaning they repay more over their lifetime.

Example 5: Postgraduate Only - £30,000 Salary

Threshold: £21,000 Repayment rate: 6% (not 9%!) Income above threshold: £30,000 - £21,000 = £9,000 Annual repayment: £9,000 × 6% = £540 Monthly repayment: £540 ÷ 12 = £45

Postgraduate loans have a 6% rate (lower than 9%) but the lowest threshold (£21,000), so repayments start at lower salaries.

See Your Exact Repayment Amount →

Multiple Loans: Undergraduate + Postgraduate Combined

If you have both an undergraduate loan (Plan 1, 2, 4, or 5) and a Postgraduate loan, both are repaid simultaneously from the same salary via PAYE.

Example: Plan 2 + Postgraduate at £45,000 Salary

Plan 2 undergraduate loan:

Threshold: £28,470
Above threshold: £45,000 - £28,470 = £16,530
Repayment: £16,530 × 9% = £1,488/year (£124/month)

Postgraduate loan:

Threshold: £21,000
Above threshold: £45,000 - £21,000 = £24,000
Repayment: £24,000 × 6% = £1,440/year (£120/month)

Total combined repayment:

Annual: £1,488 + £1,440 = £2,928 (£244/month)
As % of £45,000 salary: 6.5%

Effective combined rate: 15% on income between £21,000 and £28,470, then 9% above £28,470.

Repayment Comparison Table at Different Salaries

Salary	Plan 2 Only	Postgrad Only	Plan 2 + Postgrad Combined
£25,000	£0	£240/year (£20/month)	£240/year
£30,000	£138/year	£540/year	£678/year (£57/month)
£35,000	£588/year	£840/year	£1,428/year (£119/month)
£40,000	£1,038/year	£1,140/year	£2,178/year (£182/month)
£45,000	£1,488/year	£1,440/year	£2,928/year (£244/month)
£50,000	£1,938/year	£1,740/year	£3,678/year (£307/month)
£60,000	£2,838/year	£2,340/year	£5,178/year (£432/month)

Key insight: Having both loans significantly increases monthly deductions. At £45,000, you lose £244/month vs £124 with just undergraduate loan - an extra £120/month (£1,440/year).

Impact on take-home pay:

£45,000 salary with Plan 2 + Postgraduate: Lose £244/month student loans + £751/month tax/NI = £995/month total (22% of gross)
Take-home: £2,755/month

Student Loan Interest Rates (2025/26)

Interest accrues on your loan balance from the day you receive your first payment, even while you're studying. Different plans have different interest rate rules:

Plan 1 & Plan 4

Interest rate: Lower of RPI or Bank Rate + 1% Current rate (2025/26): 3.2% (RPI is 3.2%, Bank Rate is 4.75% so 5.75% > RPI, therefore RPI applies)

Fixed for the year: Rate is set in September each year based on March RPI figure.

Plan 2

Income-dependent interest (graduates only):

Income ≤ £28,470: RPI only = 3.2%
Income £28,470-£51,245: RPI + up to 3% (sliding scale)
Income ≥ £51,245: RPI + 3% = 6.2%

While studying: RPI + 3% = 6.2%

Example: Earning £40,000 (between £28,470 and £51,245)

Progress through band: (£40,000 - £28,470) / (£51,245 - £28,470) = 50.6%
Interest: RPI + (50.6% × 3%) = 3.2% + 1.5% = 4.7%

Plan 5

Interest rate: RPI only (no additional %) Current rate (2025/26): 3.2%

Plan 5 has the most favourable interest terms - RPI only with no additional margin, even while studying.

Postgraduate Loan

Interest rate: RPI + 3% Current rate (2025/26): 6.2% (3.2% RPI + 3%)

Highest interest rate of all plans, both while studying and after graduation.

When Are Student Loans Written Off?

Loans are automatically cancelled (written off) after a set period, regardless of balance remaining:

Plan	Write-Off Period	When Written Off
Plan 1	25 years	25 years after April you were first due to repay (if started after 1 Sept 2006), OR age 65 (if started before 1 Sept 2006)
Plan 2	30 years	30 years after April you were first due to repay
Plan 4	30 years	30 years after April you were first due to repay (if started after 1 Aug 2007), OR age 65 or 30 years (whichever first, if started before)
Plan 5	40 years	40 years after April you were first due to repay
Postgraduate	30 years	30 years after April you were first due to repay

Examples:

Scenario 1: Plan 2 graduate

Finished university: June 2020
First repayment due: April 2021
Loan written off: April 2051 (30 years later)
Age at write-off: ~52 years old

Scenario 2: Plan 5 graduate

Finished university: June 2025
First repayment due: April 2026
Loan written off: April 2066 (40 years later)
Age at write-off: ~61 years old

Key point: Most graduates never repay their full loan balance. Plan 2 average repayment is around 60% of amount borrowed. The rest is written off. This means student loans function more like a graduate tax than traditional debt.

Model Different Repayment Scenarios →

Should You Overpay Your Student Loan?

Short answer: Probably not, unless you're a high earner who will definitely repay in full before write-off.

When Overpaying Doesn't Make Sense (Most Graduates)

If you're on Plan 2, 4, or 5 earning typical graduate salaries (£25k-£45k):

You'll likely never repay the full balance
Interest accrues faster than you repay
Loan will be written off after 30-40 years
Overpayments are lost money (you'd have paid it off anyway via write-off)

Better uses of spare money:

Emergency fund (3-6 months expenses)
Pension contributions (get employer match + tax relief)
Mortgage deposit savings
High-interest debt (credit cards, personal loans)

Example: £40,000 borrowed on Plan 2, earning £35,000

Repay: £588/year
Interest at 4%: £1,600/year
Balance grows every year despite repayments
Loan written off in 2051 with £60,000+ still owing
Overpaying wastes money that would have been written off anyway

When Overpaying Makes Sense (High Earners Only)

If you're a high earner (£60k+) who will repay in full:

Criteria:

Salary £60,000+ (or rapidly rising)
Will repay full balance within write-off period
Loan balance relatively small (under £30k)

Example: £25,000 borrowed on Plan 2, earning £70,000

Annual repayment: £3,738
At 6.2% interest: £1,550
Balance decreasing by ~£2,200/year
Will clear loan in ~11 years (before 30-year write-off)
Overpaying saves 6.2% interest = worth it

Rule of thumb: Only overpay if you're confident you'll repay the full balance before write-off. For most graduates, this isn't the case.

Frequently Asked Questions

Which student loan plan am I on?

Check your annual student loan statement or Student Loans Company online account. Generally: Plan 1 if pre-2012 England/Wales or any year Northern Ireland, Plan 2 if 2012-2023 England/Wales, Plan 4 if Scotland (any year), Plan 5 if 2023+ England. Your plan is based on where you lived when you applied, not where you study or work now.

How much will I repay each month?

9% of income above your plan's threshold (6% for Postgraduate). Plan 2 at £35,000 salary: £35,000 - £28,470 threshold = £6,530 above, × 9% = £588/year or £49/month. Below threshold = £0/month. Use our calculator for your exact amount.

When do student loan repayments start?

April after you leave or complete your course. Finish in June 2024? Repayments start April 2025. Leave in December 2024? Still April 2025. Repayments don't start the month after leaving - always the following April, giving you a grace period.

What if I have both undergraduate and postgraduate loans?

Both are repaid simultaneously from the same salary. At £45,000 with Plan 2 + Postgraduate: Pay £1,488/year undergraduate (9% above £28,470 threshold) + £1,440/year postgraduate (6% above £21,000 threshold) = £2,928/year total or £244/month. Up to 15% combined rate on some income.

Should I pay off my student loan early?

Probably not. Most graduates never repay the full balance - loans are written off after 25-40 years. Overpaying is wasted money if your loan would have been written off anyway. Only overpay if you're a high earner (£60k+) who will definitely repay in full before write-off. Better to save, invest in pension, or build emergency fund.

Does my student loan affect getting a mortgage?

Yes, indirectly. Lenders assess affordability based on your take-home pay after student loan deductions. £45,000 salary with Plan 2 + Postgraduate loses £244/month, reducing your maximum mortgage by ~£50,000 (assuming 4.5x salary multiplier). However, student loans don't appear on credit reports and don't affect credit score.

What happens if I move abroad?

You must continue repaying based on your overseas income. Contact Student Loans Company to set up overseas repayments. Threshold may differ (often local equivalent of UK threshold). Failure to repay can result in full balance becoming immediately due, interest charges, and legal action. Loan still writes off after standard period.

When is my student loan written off?

Plan 1: 25 years (or age 65 if started pre-2006), Plan 2: 30 years, Plan 4: 30 years (or age 65 if started pre-2007), Plan 5: 40 years (longest!), Postgraduate: 30 years. Years counted from April after you finished course. Most balances written off with substantial amounts still owing - this is normal and expected by the system.

How can I check my student loan balance?

Log into your Student Loans Company account at www.slc.co.uk. You'll see your current balance, repayments made, interest charged, and projected write-off date. Free to check anytime. Annual statements also sent automatically.

Can I change my student loan repayment plan?

No. Your plan is determined by when and where you started your course. You cannot switch plans (e.g., from Plan 2 to Plan 1). If you took out both undergraduate and postgraduate loans, you must repay both according to their respective plan terms simultaneously.

Related Resources

UK Tax Calculator - See your full deductions including student loans
Income Tax Guide 2025/26 - Understand your income tax
Take-Home Pay Calculator - Calculate net pay after all deductions
Mortgage Affordability Guide - How student loans affect mortgage applications

Official Sources:

GOV.UK: Repaying Your Student Loan
Student Loans Company: Repayment Information
GOV.UK: Student Loan Interest Rates and Thresholds

Last updated: 9 January 2025 Disclaimer: Thresholds for 2025/26: Plan 1 £26,065, Plan 2 £28,470, Plan 4 £32,745, Plan 5 £25,000, Postgraduate £21,000. Repayment rates: 9% (undergraduate plans), 6% (postgraduate). Interest rate: 3.2% RPI for 2025/26 period. Write-off periods: 25-40 years depending on plan. Thresholds reviewed annually. Always verify with Student Loans Company. Student loans are income-contingent, not traditional debt. UK Calculator is not a student finance adviser.