Student Loan Repayments UK: Plan 1, 2, 4 and 5 Explained
Understand repayment thresholds, rates and write-off periods for all UK student loan plans. Calculate how much you repay and when your loan clears.
How Student Loan Repayments Work in the UK
UK student loans work very differently from conventional loans. You only repay when your income exceeds a threshold, repayments are a fixed percentage of earnings above that threshold (not based on what you owe), and unpaid balances are written off after a set period. This means for many graduates, student loans function more like a graduate tax than a traditional debt.
Repayments are collected through PAYE alongside Income Tax and National Insurance for employees, or via Self Assessment for the self-employed. You never need to make manual payments to the Student Loans Company unless you earn above the threshold from other income not captured through payroll.
Student Loan Repayment Plans 2025/26
| Plan | Who Is On It | Repayment Threshold | Repayment Rate | Write-off |
|---|---|---|---|---|
| Plan 1 | England/Wales pre-2012 + NI students | £24,990 | 9% above threshold | Age 65 |
| Plan 2 | England/Wales from 2012–2022 | £27,295 | 9% above threshold | 30 years after first eligible repayment year |
| Plan 4 | Scottish students | £31,395 | 9% above threshold | 30 years after first eligible year or age 65 |
| Plan 5 | England from 2023 onwards | £25,000 | 9% above threshold | 40 years after first eligible year |
| Postgraduate Loan | Postgraduate Masters/Doctoral | £21,000 | 6% above threshold | 30 years after first eligible year |
How Much Will You Actually Repay?
Your monthly repayment is always 9% of earnings above your threshold — regardless of your total loan balance. For a Plan 2 graduate earning £35,000:
- Earnings above threshold: £35,000 − £27,295 = £7,705 per year
- Annual repayment: £7,705 × 9% = £693.45 per year
- Monthly repayment: approximately £57.79
If your earnings drop below the threshold — due to part-time work, career breaks, or parental leave — your repayments automatically stop. They resume when your income rises back above the threshold.
Interest on Student Loans
Student loan interest is charged at RPI (Retail Price Index) or a margin above, depending on your plan and income. For Plan 2 borrowers, interest is RPI + up to 3% while studying, and between RPI and RPI + 3% after graduation depending on income. However, because most Plan 2 and Plan 5 borrowers are projected to never fully repay their loans before write-off, interest is largely irrelevant to most people's actual repayments — it affects the balance written off, not the amount you pay.
Should You Make Early Repayments?
For most Plan 2 and Plan 5 borrowers, voluntary early repayments are generally not recommended. If your loan will be written off before you repay it in full anyway, overpaying simply increases the amount written off at your expense. Only high earners who are likely to clear the full balance within the write-off period benefit from early repayment. Always model your expected earnings trajectory before making voluntary repayments.
Multiple Plans and Postgraduate Loans
If you have both an undergraduate loan (Plan 1, 2, 4, or 5) and a Postgraduate Loan, you repay both simultaneously. The repayments are separate: 9% above the undergraduate threshold plus 6% above the postgraduate threshold of £21,000. These are calculated independently — you can be repaying both at the same time if your income is high enough.
Use our Student Loan Calculator to estimate your monthly repayments →