Student loan repayments in the UK work nothing like an ordinary debt. There is no balance you are obliged to clear, no early-repayment penalty, and no impact on your credit file if you fail to pay it off. Instead, you repay a fixed percentage of your income above a threshold, deducted quietly from your pay — and any balance remaining after a set period is written off entirely.
That design changes the maths completely, and it means the usual instincts about debt (“pay it off fast”) are often wrong here.
The five UK student loan plans in 2025/26
Which plan applies to you depends on when and where you studied:
| Plan | Who it applies to | Repayment threshold | Repayment rate | Written off |
|---|---|---|---|---|
| Plan 1 | Loans before Sept 2012 (England, Wales, NI) | £24,990 | 9% | 25 years (or age 65) |
| Plan 2 | England & Wales from Sept 2012 | £27,295 | 9% | 30 years |
| Plan 4 | Scottish loans | £31,395 | 9% | 30 years |
| Plan 5 | England from Aug 2023 | £25,000 | 9% | 40 years |
| Postgraduate | Master’s and doctoral loans | £21,000 | 6% | 30 years |
The threshold is not a personal allowance and it is not pro-rated for part-time work. It is simply the income level above which repayments begin, on the whole salary.
How the repayment is calculated
The formula is simple: (income − threshold) × rate. This is applied to your annual income, but deducted monthly through PAYE, like income tax.
On a £35,000 salary on Plan 2: £35,000 − £27,295 = £7,705, and 9% of that is £693 a year, or about £58 a month.
On the same £35,000 salary on Plan 4 (Scotland): £35,000 − £31,395 = £3,605, and 9% is £324 a year. The higher Plan 4 threshold makes a real difference at moderate salaries.
Note the crucial point: repayments depend on your salary, not on your outstanding balance. Someone earning £100,000 with a £30,000 balance repays far more each year than someone earning £30,000 with a £70,000 balance. The size of the debt is almost irrelevant to the annual cost.
Interest: high on paper, often irrelevant in practice
Student loan interest is often quoted in frightening terms — Plan 2 interest can reach RPI + 3% (over 6%), and Plan 5 even higher. But interest only matters if you are going to repay the loan in full. For anyone whose loan will be written off, interest is simply a number that grows on paper and then disappears.
This is the single biggest source of confusion about student debt. The headline interest rate feels alarming, but for the majority of borrowers the loan will never be cleared, so interest has no practical effect on what they pay.
Should you overpay?
Almost always, no. If your loan is likely to be written off before it is repaid, overpayments are money you will never see again. The debt does not affect your credit rating and is not counted by mortgage lenders as a normal liability in most cases.
Overpaying only makes sense in a narrow set of circumstances:
- You are a consistently high earner who will clearly repay the balance well before write-off.
- You have already maximised pension contributions and other tax-advantaged savings.
- You have spare capital and no higher-interest debt.
Even then, the expected return from overpaying is usually modest compared with investing the same money. Run the numbers before acting on instinct.
Salary sacrifice and repayments
Student loan repayments are calculated on your gross pay for student loan purposes. Because salary-sacrificed pension contributions reduce that figure, sacrificing salary into a pension can lower your student loan repayment as well as your income tax and National Insurance. For borrowers in the 9% plans, this is an unusually efficient combination — every pound sacrificed can save tax, NI and student loan repayment.
What changed recently
Several things have shifted in the last few years:
- Plan 5 was introduced in August 2023 for new English borrowers, with a lower £25,000 threshold and a 40-year write-off — the longest of any plan.
- Plan 2 thresholds have been uprated annually, though the long freeze ended and thresholds now rise with average earnings.
- Plan 1 remains the most favourable plan, with a higher written-off-anyway age and a lower balance typically.
If you studied in Scotland, you are on Plan 4, which has the highest threshold and therefore the lowest repayments of the undergraduate plans.
Working out your own repayment
The exact figure depends on your plan, your salary and any salary sacrifice. Our student loan calculator models all five plans, including the postgraduate loan which runs in parallel with an undergraduate loan — meaning some graduates repay two loans at once.
To see the full effect on your pay, including the interaction with income tax and National Insurance, use the take-home pay calculator. And if you are considering a raise, the pay rise calculator shows how much of it survives tax, NI and your loan repayment.
Key takeaways
- You repay 9% of income above your plan threshold, or 6% for postgraduate.
- Repayments depend on your salary, not your outstanding balance.
- Interest is largely irrelevant for borrowers who will be written off.
- Overpaying is usually a mistake — prioritise pensions and savings instead.
- Salary sacrifice can reduce tax, NI and student loan repayments together.