What Happens to Your Student Loan After Graduation?

The April Start Date for Repayments

One of the most important things to understand about student loan repayments is that they do not begin immediately after graduation. Regardless of when you finish your course — whether that is in June, July, or September — your repayments will not start until the April following your graduation. This gives you a buffer period to find employment and get settled into working life before any deductions begin.

For example, if you graduate in July 2026, your repayments will begin from April 2027. If you happen to start a well-paid job in August 2026, your employer should not deduct any student loan repayments from your salary until the following April. However, it is worth checking your payslips carefully during this period because payroll errors do occasionally occur, and some employers mistakenly start deductions too early. If this happens, you can claim a refund — see our guide on student loan overpayment refunds for the full process.

The April start date applies to all plan types. Whether you are on Plan 1, Plan 2, Plan 4, Plan 5, or have a Postgraduate Loan, the timing is the same. What differs between plans is the repayment threshold and interest rate, but the start date mechanism is consistent across the board.

How the SLC Notifies HMRC

When you graduate or leave your course, your university informs the Student Loans Company (SLC) of your completion date. The SLC then notifies HM Revenue and Customs (HMRC) that you are now liable for student loan repayments. HMRC, in turn, updates your tax records to include a student loan repayment indicator, which tells your employer to start making deductions from the appropriate April.

This chain of communication is largely automatic, but it is not instantaneous. There can sometimes be delays, particularly if your university is slow to confirm your graduation or if there are administrative backlogs at either the SLC or HMRC. In rare cases, HMRC may not receive the notification in time, which means your employer might not start deducting when they should. While this might feel like a welcome reprieve, be aware that the repayments are still owed — they will need to be collected later, either through adjusted PAYE deductions or through your Self Assessment tax return if you are self-employed.

Your Employer Starts Deducting

Once the April start date arrives and HMRC has updated your tax code, your employer will begin deducting student loan repayments from your salary automatically through the PAYE system. You do not need to do anything to set this up — it happens as part of the standard payroll process. The deduction will appear on your payslip as a separate line item.

The amount deducted depends on your plan type and your earnings. All undergraduate plans charge 9% of your earnings above the repayment threshold. For a Plan 2 borrower earning £35,000, the annual repayment would be 9% of (£35,000 minus £29,385), which equals approximately £505.35 per year or £42.11 per month. This is not a large sum relative to your salary, but it is consistent and ongoing for as long as you earn above the threshold.

For Postgraduate Loan holders, the deduction rate is 6% of earnings above £21,000. If you have both an undergraduate and a postgraduate loan, both deductions are made simultaneously. A graduate earning £40,000 with both Plan 2 and Postgraduate loans would pay 9% above £29,385 for the undergraduate loan and 6% above £21,000 for the postgraduate loan — a combined monthly deduction of roughly £175.

What If You Are Unemployed After Graduation?

If you do not find employment immediately after graduating, or if your earnings fall below the repayment threshold, you simply do not make any repayments. There is no penalty, no additional interest charge beyond the standard rate, and no negative mark on your credit record. Student loans in the UK are fundamentally different from commercial debt in this regard — the system is designed to be affordable and income-contingent.

You do not need to contact the SLC to inform them that you are unemployed. The system automatically recognises that no PAYE deductions are being made and adjusts accordingly. If you later find employment above the threshold, deductions will begin automatically. If you remain below the threshold for the entire duration of your loan, the balance will eventually be written off without you having paid a penny in repayments — though interest will have been accumulating throughout.

That said, being unemployed does not pause the clock on your loan's write-off date. The write-off countdown begins from the April after you graduate, regardless of whether you are employed or making repayments. For Plan 1 borrowers, the loan is written off 25 years from that date. For Plan 2, it is 30 years. For Plan 4, it is 30 years. For Plan 5, it is 40 years. So even periods of unemployment count towards the write-off period.

Your First Payslip with Student Loan Deductions

Seeing student loan deductions on your payslip for the first time can be a jarring experience, especially if you were not expecting the amount. It is worth understanding exactly how the calculation works so you can verify it is correct. Your employer calculates the deduction on a per-pay-period basis. For a monthly-paid employee on Plan 2, the monthly threshold is £29,385 divided by 12, which equals £2,448.75. If your gross monthly pay is £3,000, the deduction is 9% of (£3,000 minus £2,448.75), which is £49.61.

Use our student loan calculator to see exactly how much you should expect to be deducted each month based on your salary and plan type. If the amount on your payslip does not match, speak to your payroll department. Errors can and do happen, and catching them early prevents the hassle of claiming refunds later.

Interest During the Gap Period

One aspect of the post-graduation period that often surprises borrowers is that interest continues to accrue during the gap between graduation and your first repayment. In fact, interest has been accumulating on your loan from the day it was first paid out — while you were still studying. By the time you make your first repayment, your loan balance will already be significantly higher than the sum of tuition fees and maintenance loans you originally received.

For Plan 2 borrowers, this can be particularly striking. The interest rate while studying and during the gap period is set at RPI (Retail Prices Index) plus 3%. With current RPI rates, this could mean an interest rate of up to 6.2%. On a typical Plan 2 balance of £50,000, that equates to roughly £3,100 in interest per year, or over £258 per month — accumulating before you have made a single repayment.

This is one reason why many graduates notice their student loan balance going up even after they start making repayments. The interest accruing during the gap period, combined with ongoing interest charges, can mean your balance continues to grow for years — even decades — after graduation. However, as we explain in our guide on average UK student debt, the headline balance is not the full picture, because most Plan 2 borrowers will have their remaining balance written off.

Setting Up Your SLC Online Account

One of the first things you should do after graduation is set up your online repayment account with the Student Loans Company at repayment.slc.co.uk. This is different from the account you used as a student to apply for funding. The repayment account lets you view your current balance, see a breakdown of repayments received, update your personal details, and manage your contact preferences.

Having access to your SLC account is essential for keeping track of your loan. You can see how much interest is being charged, monitor your repayments, and check that everything aligns with what is being deducted from your payslip. If you ever need to claim a refund for over-deductions, having your SLC account set up and up to date will make the process much smoother.

You should also make sure your contact details — particularly your home address and email — are current. The SLC sends annual statements and important notifications about your loan, and if they cannot reach you, you might miss important information about your repayment status or upcoming write-off dates.

Travelling or Moving Abroad After University

Many graduates choose to travel or work abroad after university. If you move overseas, your student loan does not disappear — you are still required to make repayments. However, the mechanism changes. Instead of automatic PAYE deductions, you need to contact the SLC and arrange to make repayments directly. The SLC will assess your overseas income and set a repayment amount based on the cost of living in the country where you are residing.

Failing to keep the SLC informed about your overseas income can result in penalties. The SLC has the power to impose a fixed repayment amount if you do not provide evidence of your earnings, and this amount can be significantly higher than what you would otherwise pay. It is also worth noting that if you move to a country with a reciprocal agreement (such as certain EU nations, the US, or Australia), the SLC may be able to verify your income independently.

Impact of Postgraduate Study

If you continue into postgraduate study immediately after your undergraduate degree, the start of your undergraduate loan repayments is typically deferred until you finish your postgraduate course. You will need to inform the SLC that you are continuing in education. Your undergraduate loan will continue accruing interest during this period, but no repayments will be required until the April after your postgraduate course ends.

If you take out a Postgraduate Loan for a Master's or doctoral programme, this will be a separate loan with its own repayment terms. Once both courses are complete and you enter the workforce, you will repay both loans simultaneously — 9% above the undergraduate threshold for your undergraduate loan and 6% above £21,000 for your Postgraduate Loan. This combined deduction can be sizeable, so it is worth using our student loan calculator to model the impact on your take-home pay before committing to postgraduate study.

Key Takeaways

The period immediately after graduation is a critical time for your student loan. Understanding the April start date, setting up your SLC account, and checking your first payslips are all essential steps. Remember that interest is accumulating even when you are not yet repaying, that unemployment does not create any penalties, and that moving abroad requires proactive communication with the SLC. The more informed you are about how the system works, the better positioned you will be to manage your loan effectively over the years and decades ahead.