Student Loan Repayment Threshold 2026/27 — All Plans
The repayment threshold is the single most important number for determining your monthly student loan deductions. It is the annual salary level above which you begin making repayments. Everything you earn below the threshold is completely free from student loan deductions. This guide covers the confirmed thresholds for the 2026/27 tax year across every plan type, explains how thresholds are set, and analyses what recent threshold changes mean for your finances.
What Is the Repayment Threshold?
The repayment threshold is the annual gross salary above which your employer begins deducting student loan repayments from your pay. If you earn below the threshold, you pay nothing. If you earn above it, you pay a fixed percentage — 9% for undergraduate plans and 6% for Postgraduate Loans — of everything you earn above that level. The threshold applies on a per-pay-period basis: for monthly-paid employees, your employer divides the annual threshold by 12 and deducts 9% (or 6%) of anything above that monthly figure from each payslip.
For example, if the threshold is £26,900 per year and you earn £35,000, you repay 9% of the difference — 9% of £8,100, which equals £729 per year or £60.75 per month. If your salary drops below the threshold at any point, repayments pause automatically. This income-contingent design is a fundamental feature of UK student loans and distinguishes them from commercial debt. For a full explanation, see our guide on how student loan repayments work.
Understanding the threshold matters because even small changes — a freeze here, a rise there — compound over 25 to 40 years of potential repayments. A threshold that is just £1,000 lower than it otherwise would be means an extra £90 per year in repayments (9% of £1,000), which over a 30-year repayment window amounts to £2,700 in additional payments. Threshold changes are therefore one of the most impactful policy levers the government has over how much graduates actually repay.
Confirmed 2026/27 Repayment Thresholds
The thresholds for the 2026/27 tax year (6 April 2026 to 5 April 2027) have been confirmed by HMRC in the official rates and thresholds for employers 2026 to 2027. These are the figures your employer will use to calculate student loan deductions from April 2026.
| Plan | Annual Threshold | Monthly Threshold | Weekly Threshold | Repayment Rate |
|---|---|---|---|---|
| Plan 1 | £26,900 | £2,241.67 | £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% |
If you are unsure which plan you are on, check our guide on which student loan plan you are on. Your plan type appears on your payslip and you can also verify it through your online Student Loans Company account.
Changes from 2025/26 to 2026/27
Here is how the 2026/27 thresholds compare to the current 2025/26 tax year. Plans 1, 2, and 4 all see increases, while Plan 5 and Postgraduate Loan remain unchanged.
| Plan | 2025/26 Threshold | 2026/27 Threshold | Change | Basis |
|---|---|---|---|---|
| Plan 1 | £26,065 | £26,900 | +£835 | RPI uplift |
| Plan 2 | £28,470 | £29,385 | +£915 | Inflation uplift |
| Plan 4 | £32,745 | £33,795 | +£1,050 | RPI uplift |
| Plan 5 | £25,000 | £25,000 | No change | Legislated freeze until 2027 |
| Postgraduate Loan | £21,000 | £21,000 | No change | Frozen |
The Plan 2 threshold has now risen for the second consecutive year, after being frozen at £27,295 from the 2021/22 to 2024/25 tax years. The increase from £28,470 to £29,385 represents continued progress in restoring the threshold to a level that keeps pace with inflation. Plan 5 remains frozen at £25,000 by design — the legislation creating Plan 5 set this threshold with no automatic inflation link until at least 2027.
How Thresholds Are Decided
The mechanism for setting thresholds differs by plan type, and understanding these mechanisms helps predict future changes. The government has significant discretion in setting thresholds, and the approach has changed multiple times over the years.
Plan 1 Threshold
The Plan 1 threshold has historically been linked to the Retail Prices Index (RPI). Each year, the March RPI figure is used to calculate the percentage increase, which is then applied to the current threshold and rounded to the nearest £5. This link to RPI means Plan 1 thresholds generally keep pace with inflation, providing borrowers with some protection against fiscal drag. However, the government can override this link — and has done so in the past, notably freezing the Plan 1 threshold at £19,390 from 2012 to 2016 before eventually raising it. The 2026/27 figure of £26,900 represents a continued standard RPI-linked increase from the previous year's £26,065.
Plan 2 Threshold
When Plan 2 was introduced in 2012, the threshold was set at £21,000 with a commitment to increase it in line with average earnings. This commitment was initially honoured, with the threshold rising from £21,000 to £25,000 in April 2018, then to £25,725, £26,575, and £27,295. However, in 2021, the government froze the Plan 2 threshold at £27,295, where it remained for four consecutive years (2021/22 through 2024/25). The freeze was lifted in 2025/26, when the threshold rose to £28,470, and it has continued to rise to £29,385 for 2026/27. Whether the government will maintain annual increases going forward or freeze the threshold again depends on fiscal pressures and policy priorities.
Plan 4 Threshold (Scotland)
The Plan 4 threshold is set by the Scottish government and has generally been the most generous of all plan types. It is linked to RPI and has risen consistently, reaching £32,745 for 2025/26 and now £33,795 for 2026/27. This higher threshold means Scottish graduates earning between the Plan 1 and Plan 4 thresholds benefit significantly compared to their English counterparts — a graduate earning £30,000 would pay nothing on Plan 4 but £279 per year on Plan 1. For a detailed comparison, see our article on England vs Scotland student loans.
Plan 5 Threshold
Plan 5 was introduced for students starting courses from September 2023 onwards. Unlike other plans, the threshold was legislatively set at £25,000 with no automatic inflation link. The government has stated that the Plan 5 threshold will remain at £25,000 until at least 2027, after which it may be reviewed. This makes Plan 5 the most predictable but also potentially the most punitive for borrowers over time, as inflation erodes the real value of the £25,000 threshold each year. To understand how Plan 5 differs from Plan 2, see our Plan 2 vs Plan 5 comparison.
Postgraduate Loan Threshold
The Postgraduate Loan threshold has been frozen at £21,000 since the scheme was introduced in 2016. This is the lowest threshold of any plan and has never been increased. There are no current indications that the government plans to raise it, making the Postgraduate Loan threshold the most affected by fiscal drag of any plan type. In real terms, £21,000 in 2016 is equivalent to approximately £26,000 in 2026 — postgraduate borrowers now start repaying at a significantly lower real salary than was originally intended.
Impact of Threshold Freezes
Threshold freezes have been one of the most consequential policy decisions affecting student loan borrowers in recent years. When a threshold is frozen, it does not rise with inflation, meaning that as average wages increase, a progressively larger portion of graduates' income falls above the threshold — and they pay more each year. This effect is known as fiscal drag and it operates silently, increasing repayments without any visible change to the headline repayment rate. For a detailed analysis, see our article on how the threshold freeze affects you.
Consider a graduate who earned exactly £27,295 in 2021/22 — right at the Plan 2 threshold. They paid nothing in student loan repayments that year. Fast forward to 2024/25: if their salary grew by 3% per year (roughly in line with average earnings growth), they earned approximately £29,800. They were still on the frozen threshold of £27,295, so they repaid 9% of £2,505 — that is £225.45 per year, or £18.79 per month. Without the freeze, the threshold might have risen to around £30,000, and this graduate would have been paying nothing.
The cumulative effect of the Plan 2 threshold freeze from 2021/22 through 2024/25 is estimated to have cost the average Plan 2 borrower between £3,000 and £6,000 in additional repayments over their loan lifetime, depending on their salary trajectory. Now that the threshold has been unfrozen and is rising again (to £28,470 in 2025/26 and £29,385 in 2026/27), borrowers are seeing some relief, but the additional repayments made during the freeze years cannot be recovered.
History of Threshold Changes
Threshold history reveals a pattern of government intervention that has significantly affected borrowers. Here is a summary of key threshold movements across all plans.
| Tax Year | Plan 1 | Plan 2 | Plan 4 | Plan 5 | Postgrad |
|---|---|---|---|---|---|
| 2016/17 | £17,495 | £21,000 | — | — | £21,000 |
| 2017/18 | £17,775 | £21,000 | — | — | £21,000 |
| 2018/19 | £18,330 | £25,000 | — | — | £21,000 |
| 2019/20 | £18,935 | £25,725 | — | — | £21,000 |
| 2020/21 | £19,390 | £26,575 | £19,390 | — | £21,000 |
| 2021/22 | £19,895 | £27,295 | £25,000 | — | £21,000 |
| 2022/23 | £20,195 | £27,295 | £25,375 | — | £21,000 |
| 2023/24 | £22,015 | £27,295 | £27,660 | £25,000 | £21,000 |
| 2024/25 | £24,990 | £27,295 | £31,395 | £25,000 | £21,000 |
| 2025/26 | £26,065 | £28,470 | £32,745 | £25,000 | £21,000 |
| 2026/27 | £26,900 | £29,385 | £33,795 | £25,000 | £21,000 |
Several patterns are notable. Plan 1 experienced a significant jump from £22,015 (2023/24) to £24,990 (2024/25) — a £2,975 increase — as the government played catch-up after years of below-inflation increases. Plan 2 was frozen for four consecutive years (2021/22 through 2024/25) at £27,295 before being unfrozen in 2025/26. Plan 4 has risen dramatically since its introduction, from £19,390 (matching Plan 1) to £33,795, reflecting the Scottish government's more generous approach. The Postgraduate threshold has never changed from £21,000, making it the most frozen threshold in the system.
What the 2026/27 Changes Mean for Your Monthly Repayments
The threshold increase from 2025/26 to 2026/27 will reduce monthly repayments for borrowers on Plans 1, 2, and 4. Here is how the changes affect monthly deductions at various salary levels. Plans 5 and Postgraduate are unchanged.
| Salary | Plan 1 2025/26 | Plan 1 2026/27 | Monthly Saving |
|---|---|---|---|
| £28,000 | £14.51 | £8.25 | £6.26 |
| £32,000 | £44.51 | £38.25 | £6.26 |
| £40,000 | £104.51 | £98.25 | £6.26 |
| £50,000 | £179.51 | £173.25 | £6.26 |
The monthly saving is a constant £6.26 per month (£75.15 per year) for all Plan 1 borrowers earning above the new threshold of £26,900. This is because the saving is always 9% of the threshold increase (£835) divided by 12. Similarly, Plan 2 borrowers will save 9% of £915 divided by 12, which equals £6.86 per month or £82.35 per year. Plan 4 borrowers save 9% of £1,050 divided by 12, or £7.88 per month (£94.50 per year). While these savings appear modest in monthly terms, they compound over decades. A Plan 2 borrower who repays for the full 30 years will save approximately £2,471 in total from the 2026/27 threshold increase alone — assuming the threshold then continues to rise with inflation in subsequent years.
Use our Plan 1 calculator, Plan 2 calculator, Plan 4 calculator, or Plan 5 calculator to model the exact impact on your specific salary and balance. You can compare different threshold scenarios using the comparison tool to see how threshold changes affect your total repayment over time.
Will Thresholds Continue to Rise After 2026/27?
Predicting future threshold movements requires understanding the political and fiscal dynamics at play. Threshold increases reduce government revenue from student loan repayments, making them costly from a public finance perspective. Conversely, threshold freezes are an effective but politically subtle way to increase the amount graduates repay.
For Plan 1, the RPI link has been broadly respected in recent years (after the 2012-2016 freeze), so continued annual increases in line with inflation seem likely. For Plan 2, the threshold has now risen for two consecutive years after the four-year freeze, suggesting the government is committed to annual increases — but this could change if fiscal pressures mount. For Plan 5, the legislated freeze until 2027 is clear, but what happens after that is unknown. The government has made no commitments on post-2027 Plan 5 thresholds, and borrowers should be prepared for the possibility that £25,000 remains the threshold for several more years.
For the Postgraduate Loan, the persistent freeze at £21,000 since 2016 suggests the government has little appetite to increase this threshold. At current inflation rates, the real value of £21,000 has fallen significantly — it was equivalent to roughly £26,000 in today's money when it was set. This means postgraduate borrowers start repaying at a relatively lower real salary than was originally intended, paying 6% of income above a threshold that becomes less generous every year.
How Threshold Changes Interact with Interest Rates
Thresholds and interest rates are the two key variables that determine how much a borrower repays over the life of their loan. A higher threshold reduces repayments, which — for borrowers who will repay in full — extends the repayment period and increases total interest paid. For borrowers who will not repay in full (the majority of Plan 2 and Plan 5 borrowers), a higher threshold simply reduces total lifetime repayments without any offsetting interest effect, because the remaining balance is written off regardless of its size.
This creates an important distinction. For Plan 1 borrowers who will mostly repay in full, a higher threshold is somewhat double-edged: lower monthly repayments but higher total cost due to extended repayment time and more interest accrual. For Plan 2 and Plan 5 borrowers who will not repay in full, a higher threshold is an unambiguous benefit — it reduces the total amount they will ever repay. See our interest rates explained guide for a detailed breakdown of how interest interacts with repayments across all plans.
Key Takeaways for 2026/27
- Plan 1 threshold rises to £26,900, saving borrowers £6.26 per month (£75.15 per year) at every salary level above the threshold.
- Plan 2 threshold rises to £29,385, continuing the recovery from the four-year freeze at £27,295. This saves Plan 2 borrowers £6.86 per month (£82.35 per year).
- Plan 4 (Scotland) rises to £33,795, maintaining the most generous threshold of any undergraduate plan and saving borrowers £7.88 per month (£94.50 per year).
- Plan 5 remains frozen at £25,000 as legislated, with no change expected before 2027 at the earliest.
- Postgraduate Loan threshold remains at £21,000 for the tenth consecutive year, increasingly eroded by inflation.
- Threshold changes affect every borrower equally in absolute terms — the monthly saving from a threshold increase is the same whether you earn £30,000 or £100,000.
- For borrowers unlikely to repay in full (most Plan 2 and Plan 5), threshold increases are an unambiguous benefit, reducing total lifetime repayments.
- For borrowers who will repay in full (most Plan 1), threshold increases reduce monthly payments but may increase total interest paid due to a longer repayment period.
Stay informed about how threshold changes affect your specific repayment trajectory. Use our calculators — Plan 1, Plan 2, Plan 4, Plan 5, or Postgraduate — to model your repayments at the new 2026/27 thresholds. For guidance on whether to make voluntary overpayments, see our guide on whether you should repay early. If your income is variable or you are self-employed, see our article on student loan repayments for the self-employed.