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The Complete Guide to UK Student Loan Repayments in 2026/27

If you went to university in the United Kingdom, there is a good chance you graduated with a student loan. Whether you borrowed to cover tuition fees, maintenance costs, or both, understanding how repayments work is one of the most important financial skills you can develop as a graduate. This page serves as your comprehensive guide to everything you need to know about repaying your UK student loan — from how much you will repay each month, to when your balance gets written off entirely.

Unlike conventional debt such as a personal loan or a mortgage, UK student loans operate on an income-contingent basis. That means you do not have fixed monthly payments. Instead, what you repay each month is directly tied to how much you earn. If your income falls below a certain threshold, you pay absolutely nothing. This makes student loans one of the most borrower-friendly forms of debt available in the UK — but it also makes them confusing, because the rules differ depending on which repayment plan you are on.

How Student Loan Repayments Are Calculated

The fundamental principle behind UK student loan repayments is simple: you pay a fixed percentage of your income above a specific threshold. If you earn below that threshold, you pay nothing. There are no minimum payments, no late fees, and no penalties for non-payment when your income is too low.

For undergraduate loans (Plans 1, 2, 4 and 5), the repayment rate is 9% of income above the threshold. For Postgraduate Loans, the rate is 6%. These percentages apply to gross income — that is, your salary before income tax and National Insurance are deducted.

Here is a practical example. If you are on Plan 2 with an annual salary of £35,000, the repayment threshold is £29,385. You repay 9% of the difference:

• Income above threshold: £35,000 − £29,385 = £5,615
• Annual repayment: 9% × £5,615 = £505.35
• Monthly repayment: £505.35 ÷ 12 = approximately £42 per month

That £42 per month is deducted automatically from your pay packet by your employer through PAYE, in exactly the same way as income tax and National Insurance. You do not need to set up a direct debit or make manual payments — it happens automatically. If you are self-employed, repayments are calculated and collected through your Self Assessment tax return instead.

Understanding the Five UK Student Loan Plans

There are five different student loan repayment plans in the UK, and which one you are on depends on where you studied and when you started your course. Each plan has its own repayment threshold, interest rate, and write-off period. Getting the right plan is essential for accurate repayment calculations — use our Which Plan Am I On? guide if you are unsure.

Plan 1 — Pre-2012 England, Wales & Northern Ireland

Plan 1 covers students who started their course in England or Wales before 1 September 2012, and Northern Irish students from 1998 onwards. This is the oldest active plan. Because tuition fees were capped at £3,375 per year (and earlier at £1,000), Plan 1 balances tend to be significantly lower than Plan 2 balances. The repayment threshold is £26,900 per year, the interest rate is a modest 3.2% (the lower of RPI or Bank of England base rate + 1%), and the loan is written off after 25 years. Many Plan 1 borrowers with decent incomes will actually repay their loan in full, thanks to the smaller balance and lower interest.

Plan 2 — Post-2012 England & Wales (Most Common)

Plan 2 is by far the most common plan among current UK graduates. It applies to students who started their course in England or Wales on or after 1 September 2012, when tuition fees increased to up to £9,250 per year. This means most Plan 2 borrowers graduated with total debts of £40,000 to £60,000 or more when maintenance loans are included. The repayment threshold is £29,385 per year, and the interest rate uses an income-based sliding scale: from 3.2% (RPI) for those earning at or below the threshold, up to 6.2% (RPI + 3%) for those earning £52,885 or more. The loan is written off after 30 years. Government estimates suggest that around 70–75% of Plan 2 borrowers will never repay their loan in full — the remaining balance will be written off tax-free.

Plan 4 — Scotland

Plan 4 applies to Scottish students who started on or after 1 September 1998. Because tuition fees in Scotland are generally covered by the Student Awards Agency Scotland (SAAS), Scottish students typically borrow only for living costs, resulting in lower overall balances. Plan 4 has the highest repayment threshold of any standard plan at £33,795 per year, meaning you do not start repaying until you earn above this amount. The interest rate is 3.2%and the write-off period is 30 years (or age 65 for loans taken before 2007).

Plan 5 — Post-2023 England (Newest Plan)

Plan 5 is the newest student loan plan, introduced for students starting courses in England from August 2023. It was designed to address some of the criticisms of Plan 2. The key differences are: a lower threshold of £25,000 (meaning repayments start sooner), a lower interest rate of RPI only (3.2%, with no additional margin), and a significantly longer write-off period of 40 years. The lower interest is beneficial, but the combination of a lower threshold and 40-year term means many Plan 5 borrowers may actually repay more in total than they would have under Plan 2.

Postgraduate Loan — Master's & Doctoral

Postgraduate Loans are separate from undergraduate loans and cover Master's courses (up to £13,206) and Doctoral courses (up to £31,122). They have a lower repayment threshold of £21,000, a lower repayment rate of 6% (rather than 9%), and an interest rate of RPI + 3% (6.2%). If you have both an undergraduate and postgraduate loan, you repay both simultaneously from the same income — which can mean significant combined deductions. Postgraduate Loans are written off after 30 years.

2026/27 Repayment Thresholds and Interest Rates

The following table summarises the key parameters for all five loan plans in the current 2026/27 tax year. These figures are set by the government and are typically reviewed each April.

How Interest Works on Student Loans

Interest on UK student loans is based on the Retail Prices Index (RPI), a measure of inflation. The government takes the March RPI figure each year and uses it to set interest rates from the following September. For most plans, the interest rate is either RPI alone or the lower of RPI and the Bank of England base rate plus 1%.

Plan 2 is the exception — it uses an income-based sliding scale. If you earn at or below the repayment threshold (£29,385), you pay RPI only (3.2%). If you earn £52,885 or above, you pay the maximum rate of RPI + 3% (6.2%). Between these two points, the rate increases gradually. This means a Plan 2 borrower earning £40,000 would pay roughly RPI + 1.5% interest.

Importantly, during your course and until the April after you graduate, Plan 2 charges the maximum rate (RPI + 3%) regardless of your income. This is why many graduates find their balance is higher when they start repaying than the amount they originally borrowed. For a deeper dive, see our interest rates explained guide.

When Is Your Student Loan Written Off?

Every UK student loan has an expiry date. After a set number of years — counted from the April after you leave your course — any remaining balance is cancelled completely. This write-off is automatic, tax-free, and you owe nothing further. The write-off periods are: Plan 1 after 25 years, Plan 2 after 30 years, Plan 4 after 30 years, Plan 5 after 40 years, and Postgraduate Loans after 30 years.

The write-off is one of the most important features of UK student loans and is the reason that financial experts generally advise against making voluntary overpayments unless you are certain you would repay in full before the write-off date. For the majority of Plan 2 borrowers, the loan effectively functions as a graduate tax — you pay a percentage of your income for 30 years, and then it stops. Read our full guide on when your loan is written off.

Should You Overpay Your Student Loan?

This is one of the most frequently asked questions about student loans, and the answer depends entirely on your personal circumstances. The golden rule is: only overpay if you would repay the loan in full before write-off anyway. If your loan would be written off with a remaining balance, every extra pound you pay is a pound that would have been cancelled for free.

For most Plan 2 borrowers with typical graduate salaries, the loan will be written off — making overpayments a poor financial decision. Instead, that money would typically be better directed towards pension contributions (especially via salary sacrifice, which also reduces your repayments), building an emergency fund, investing in a stocks and shares ISA, or paying off higher-interest debts like credit cards. Use our early repayment calculator to model your specific situation and see whether overpaying saves or wastes money.

Salary Sacrifice and Student Loans

One of the most effective strategies for reducing student loan repayments is using salary sacrifice pension contributions. When you sacrifice part of your salary into a pension, your gross pay is reduced before student loan repayments are calculated. This means lower repayments. For borrowers whose loans will be written off, this is a double win — you build your pension while simultaneously reducing payments on a debt that would be cancelled anyway.

However, not all pension contribution methods reduce repayments. Salary sacrifice and net pay arrangements reduce your gross pay and therefore reduce student loan deductions. Relief at source (used by some providers like NEST) does not reduce gross pay and has no effect on student loan repayments. Check with your employer which method they use. For full details, read our salary sacrifice guide.

Living or Working Abroad

If you move abroad, you are still legally obligated to repay your student loan. You must inform the Student Loans Company (SLC) of your move, and they will set fixed monthly repayment amounts based on the cost of living in the country you move to. Different countries have different equivalent thresholds. Failure to keep the SLC updated can result in penalties and your account being placed in arrears.

Student Loans and Your Credit Score

UK student loans do not appear on your credit file and do not directly affect your credit score. This is different from commercial debt. However, student loan repayments do reduce your net take-home pay, and mortgage lenders will factor this reduced income into their affordability calculations when you apply for a mortgage. So while it will not damage your credit rating, it can affect how much you are able to borrow for a house.

Multiple Jobs and Student Loan Repayments

If you have more than one job, each employer calculates student loan deductions independently based on the earnings from that specific job alone. This can lead to under-repayment if your combined income exceeds the threshold but neither individual job does. In this situation, HMRC will reconcile the difference through a year-end adjustment, and you may receive a bill for the underpaid amount through your Self Assessment tax return.