UK Student Loan Plans 2026/27 — Plan 1, 2, 4, 5 and Postgraduate

UK student loan repayments depend on the plan type, not simply on the amount originally borrowed. In the 2026/27 tax year, Plan 1, Plan 2, Plan 4 and Plan 5 repayments are generally 9% of income above the relevant threshold. A Postgraduate Loan is generally 6% of income above its threshold. The balance you owe and the interest added to it do not directly determine the percentage deducted from your pay each period.

The thresholds from 6 April 2026 are different:

The rounded monthly and weekly figures are useful for understanding a payslip; payroll tables use the official period calculations and rounding rules. Plan 4 is associated with Scottish borrowers, while Plan 1, Plan 2 and Plan 5 cover different undergraduate loan histories. A postgraduate loan can exist alongside one undergraduate plan.

What is the difference between the plans?

The plan is a record of the terms under which the loan was issued. It can reflect the country or administration responsible for the loan, the course start date and whether the borrowing was an undergraduate or postgraduate loan. The most reliable way to identify it is to check the Student Loans Company account, loan correspondence or the information supplied to your employer.

Plan 1 has a 2026/27 annual repayment threshold of £26,900. Plan 2 uses £29,385. Plan 4 uses £33,795. Plan 5 uses £25,000. These thresholds are not interchangeable. A person paid monthly at £30,000 could have a repayment under Plan 1, Plan 2 or Plan 5 but not necessarily under Plan 4, because the monthly income can be above one threshold and below another.

The Postgraduate Loan is a separate loan type with a £21,000 annual threshold and a 6% deduction rate. It can be held at the same time as Plan 1, 2, 4 or 5. The two deductions are calculated separately when both thresholds are exceeded. This is why someone with a postgraduate loan can have a larger total student-loan deduction than a colleague with the same salary and only an undergraduate plan.

Do not identify the plan from the university name alone. Study history can include a transfer, a previous course, a loan issued in another part of the UK or a postgraduate course after an undergraduate loan. Check the official record before asking payroll to change the plan.

How is a single-plan repayment calculated?

For Plan 1, 2, 4 or 5, the basic calculation is the pay in the relevant period minus the plan threshold for that period, multiplied by 9%. For example, if a monthly Plan 1 borrower is paid £2,750, the difference from the published monthly threshold of £2,241 is £509. Nine per cent of £509 is £45.81, and the payroll example is rounded down to a £45 deduction.

For a Postgraduate Loan, the calculation is pay above the £1,750 monthly threshold multiplied by 6%. If monthly pay is £2,500, the excess is £750 and the postgraduate deduction is £45. The calculation is separate from Income Tax, National Insurance and any undergraduate student loan deduction.

Payroll may calculate using exact period thresholds rather than the rounded display numbers in a guide. Bonuses, overtime, commission and certain other earnings can push a pay period above the threshold even when ordinary monthly salary is below it. The deduction is based on the pay in that period, so a high bonus month can produce a student-loan deduction that does not look like 9% of the annual salary divided evenly across twelve months.

What happens when I have Plan 1 and Plan 2?

If you have more than one undergraduate plan and no postgraduate loan, GOV.UK says you repay 9% of income above the lowest threshold among the plans. You do not pay 9% above each threshold as two separate deductions. The lower threshold determines when the combined undergraduate repayment starts.

The repayment can later be split between loans. GOV.UK gives a Plan 1 and Plan 2 example: the Plan 1 threshold is lower, so the initial repayment is calculated above Plan 1’s threshold. There is a cap on how much is allocated to the plan with the lower threshold; the difference between the two thresholds determines the cap. Amounts above that cap can be allocated to the other plan.

This allocation matters for account balances but does not create a second 9% charge on the same income. A payroll deduction is the combined repayment. If your payslip shows one student-loan line, that does not prove that only one loan exists; payroll can make one deduction for multiple undergraduate plan types.

What happens with an undergraduate plan and a Postgraduate Loan?

The postgraduate calculation and undergraduate calculation run in parallel. You pay 6% on income above the £21,000 postgraduate threshold and 9% on income above the lowest applicable undergraduate threshold. If your income is between the two thresholds, only the loan whose threshold has been exceeded generates a deduction.

For example, with a Postgraduate Loan and Plan 2, monthly income of £2,500 is above the £1,750 postgraduate threshold and above the £2,448 Plan 2 threshold. The postgraduate calculation is £750 × 6% = £45. The Plan 2 calculation is £52 × 9% = £4.68. The combined amount is £49 after the payroll rounding shown by GOV.UK.

This combined calculation explains why a person can have deductions of 15% on different slices of income without there being one single 15% threshold. The 6% applies only to the postgraduate excess, and the 9% applies only to the undergraduate excess. Use a plan-specific calculator or the official payroll tables rather than multiplying total income by 15% from the first pound.

How do bonuses and overtime affect repayments?

Student-loan deductions are based on income before tax and other deductions. GOV.UK says income includes items such as bonuses and overtime. A bonus paid in one monthly period can take the pay for that period above the applicable threshold, generating a deduction even if your regular salary remains below the annual threshold.

This is a timing effect, not necessarily evidence that the annual calculation is wrong. If total income for the year is below the annual threshold, GOV.UK says you can ask for a refund at the end of the tax year. Keep the payslips showing the bonus, the loan plan and the annual income evidence. The employer cannot normally smooth a monthly bonus deduction simply because the employee expects lower income later.

A bonus can also interact with tax codes, pension salary sacrifice and National Insurance, but each calculation follows its own rules. Do not estimate the student-loan deduction from net pay. Use gross eligible pay and the correct period threshold.

How do I choose the plan on a new starter form?

When an employee starts a job, the employer needs the correct student-loan and postgraduate-loan information. GOV.UK’s 2026/27 materials state that the online starter checklist allows one undergraduate plan type—Plan 1, 2, 4 or 5—and can also select Postgraduate Loan at the same time. The choice should match the borrower’s official records.

If the employee does not know the plan, check the Student Loans Company account or loan correspondence. Do not choose Plan 2 because it is the most familiar, and do not choose Plan 5 because it has the lowest threshold. A wrong plan can create deductions that are too high or too low and require a later correction.

Employers receive start notices and stop notices and should use the official payroll process. The employee should check the first payslip, but should not instruct payroll to override an HMRC or SLC notice based only on a personal calculation. If the loan record is wrong, contact the relevant official service and retain the case reference.

What if the wrong plan is being deducted?

Compare the payslip with your official loan account, starter information and any employer start notice. Check whether the issue is the plan type, the postgraduate-loan indicator, the pay frequency, a bonus, the timing of a job change or a payroll correction. A one-month difference can be caused by a variable payment rather than a wrong plan.

If the wrong plan is confirmed, ask payroll to check the latest notice and contact the Student Loans Company or HMRC through the appropriate route. Keep payslips and the date on which the correction was requested. A payroll correction may be applied in a later period; do not assume that the full difference will appear as a cash refund immediately.

If annual income is below the threshold and repayments were made because of variable monthly pay, check the refund process. GOV.UK says a refund may be requested at the end of the tax year. A refund is different from voluntary overpayments, which generally do not change the required income-contingent deduction for the period.

Does the outstanding balance affect what I pay?

The amount owed, including interest, does not determine the percentage of income deducted each year. The income threshold and plan rate determine the required income-contingent repayment. A borrower with a large balance and a borrower with a small balance can have the same deduction if they have the same plan and eligible income.

The balance matters for the duration of repayment, interest and whether a voluntary payment might be financially sensible, but it does not replace the payroll formula. Before making an overpayment, check the official loan terms and your personal financial priorities. Voluntary payments can have different consequences from compulsory deductions and may not be refundable.

How does repayment work for self-employed or overseas borrowers?

Self-employed borrowers can have student-loan obligations through Self Assessment, while employees normally repay through payroll. The income definition and calculation route can differ, so do not copy a monthly payroll example directly into a Self Assessment calculation. Report the relevant loan type and income accurately in the return.

If you live or work overseas, the repayment arrangement can use country-specific thresholds and fixed repayment requirements. GOV.UK says overseas borrowers need to update their employment details each year and that the repayment thresholds differ by country. This guide uses UK payroll thresholds and should not be used for an overseas assessment.

Frequently Asked Questions

This guide reflects GOV.UK and HMRC guidance available on 22 September 2026. Check your Student Loans Company account, payroll notice and current official thresholds before changing repayment information. It is general information, not personal financial advice.

Official sources

• GOV.UK — How much you repay on a student loan
• GOV.UK — 2026 to 2027 student and postgraduate loan deduction tables
• GOV.UK — Student loan repayment guidance for employers
• GOV.UK — Rates and thresholds for employers 2026 to 2027
• GOV.UK — Student loans terms and conditions 2026 to 2027