Student Loan Repayment Guide: Plans, Thresholds & Strategies

Repayment Plans at a Glance

Plan 1 (started before Sept 2012): Repay 9% of income above £24,990. Written off after 25 years. Interest rate: lower of RPI or Bank of England base rate + 1%.

Plan 2 (started Sept 2012 onwards): Repay 9% of income above £27,295. Written off after 30 years. Interest rate: RPI + 0-3% depending on income.

Plan 4 (Scotland): Repay 9% of income above £31,395. Written off after 30 years.

Plan 5 (started Sept 2023 onwards): Repay 9% of income above £25,000. Written off after 40 years. Interest rate: RPI only.

How Repayments Work

Repayments are deducted automatically from your salary through PAYE, just like tax. You only repay when earning above the threshold. If you earn £35,000 on Plan 2, you repay 9% of £7,705 = £693.45 per year (£57.79/month).

Should You Repay Early?

For most graduates on Plan 2, early repayment is not worthwhile because the debt is written off after 30 years and many will never repay in full. Early repayment only makes sense if you are on track to repay the full balance before write-off, which typically means earning significantly above average.

Plan 1 borrowers are more likely to benefit from early repayment since balances are typically smaller and more likely to be repaid in full.

Key Things to Know

Student loan repayments do not affect your credit score. The balance does not appear on your credit report. However, the monthly deduction reduces your disposable income, which some mortgage lenders consider in affordability calculations.