Student Loan Repayments 2026/27

Student loan repayments are deducted from gross pay alongside income tax and National Insurance, but they are not tax. For 2026/27 the annual thresholds are £26,900 (Plan 1), £29,385 (Plan 2), £33,795 (Plan 4) and £25,000 (Plan 5), all at 9% of income above the relevant threshold; Postgraduate Loans repay at 6% above £21,000. See your deductions with the Salary Calculator→, which models student loans.

This guide covers which plan you are on, how thresholds and rates work, how PAYE collects repayments, interest, and when loans are written off.

Which Plan Are You On?

Your plan is fixed by the loan terms and the course/region that created it — you cannot switch it voluntarily. The thresholds in the table are the 2026/27 figures used for payroll deductions and annual repayment calculations. Repayments use income before tax and other deductions, including bonuses and overtime. If you have an undergraduate loan and a Postgraduate Loan, the undergraduate plan repayment and the 6% postgraduate deduction can both apply to the same pay.

How Repayments Are Calculated

You repay the plan percentage of everything you earn above the threshold, per pay period. On a monthly payroll, an employer compares your monthly gross pay with one-twelfth of the annual threshold and deducts 9% of the excess; weekly-paid staff use one-fifty-second. The calculation is per pay period, not averaged over the year — so a single large bonus month can trigger a deduction even if your annual income ends below the threshold.

Because repayments track salary, a graduate on Plan 2 at £40,000 loses about £79.61 a month before tax and NI are calculated. The same pay on Plan 5 at a £25,000 threshold produces £1,350 a year — £112.50 a month — because the lower threshold catches more of the salary. The difference between the Plan 2 and Plan 5 thresholds is £4,385 in 2026/27, which changes the annual deduction by about £394.65 at a salary above both thresholds.

Worked Examples Across Plans

Example 1 — Plan 4 (Scotland), £35,000: Earnings above the £33,795 threshold are £1,205; 9% of that is £108.45 a year, or £9.04 a month. A Scottish graduate pays the same 9% rate but on a higher threshold than Plan 2, so they repay £396.90 a year less than an English Plan 2 graduate on the same salary.

Example 2 — Plan 2 plus Postgraduate Loan, £30,000: The undergraduate loan repays 9% of £615 = £55.35 a year; the PG loan repays 6% of £9,000 = £540 a year. Combined, £595.35 a year, or £49.61 a month, is deducted before income tax applies to the rest.

Interest and Write-Off

Interest is charged from the first payment and continues while the balance remains. For 1 September 2026 to 31 August 2027, Plan 1 is based on RPI or the applicable Bank Base Rate comparison, Plan 2 is income-linked RPI to RPI+3% subject to the current cap, Plan 5 is normally RPI, and the Postgraduate Loan is normally RPI+3% subject to the current cap. The exact rate can change during the year under the prevailing-market-rate cap.

Write-off timing is plan-specific: Plan 2 is normally 30 years after the April when repayments were first due; Plan 5 is 40 years; an England/Wales Postgraduate Loan is 30 years. Plan 1 and Plan 4 depend on the loan's start date and terms, with 25- or 30-year rules or age-based rules in older cases. Loans can also be cancelled on death or qualifying permanent disability. Check the SLC terms for the exact loan rather than applying one write-off period to every plan.

Repayments When Self-Employed

If you are self-employed, student-loan repayments can be calculated through Self Assessment using the relevant annual income and plan rules, alongside income tax and Class 4 NI. The repayment can appear as part of the tax bill rather than a monthly payroll deduction. The exact treatment depends on your other employment income, plan type and HMRC/SLC records, so budget for the annual liability and use the current Self Assessment guidance.

Changing Jobs and Multiple Loans

When you change employer, complete the starter information accurately and give the new employer the relevant P45 details. Payroll uses HMRC/SLC notices and the plan information supplied by the employee; deductions can be corrected when the record is updated. If you have an undergraduate loan and a Postgraduate Loan, the deductions can both apply. Where you have more than one undergraduate plan type, payroll generally starts with the lowest repayment threshold and SLC allocation rules determine how the repayment is split. Check the plan line on your payslip and contact HMRC or SLC if it looks wrong.

Payroll deductions versus the annual position

PAYE tests the threshold by pay period, so a high bonus or irregular pay can create a deduction even when the full-year income later falls below the annual threshold. That is not the same as an Income Tax calculation, where annual income and allowances can be reconciled through the tax year. Keep the payslip, bonus date, gross pay and plan information if you expect to ask for a refund or correction.

When moving jobs, check the first payslip from the new employer rather than assuming the old plan has transferred correctly. A P45 and starter information help payroll identify the loan, but the Student Loans Company record remains the authoritative source for the plan and balance. If deductions continue after a loan is repaid, contact the SLC and follow its refund process; do not cancel the payroll instruction by guessing which plan applies.

Self-employment and mixed income

A person with both employment and self-employed income can see student-loan deductions through PAYE and a further calculation through Self Assessment. The result depends on the plan, the income included and the information HMRC and the SLC hold. Do not add the PAYE deductions to a generic annual percentage and assume that is the final liability. Keep the P60, payslips, Self Assessment calculation and SLC statements together.

If a repayment is collected through Self Assessment, it is still a student-loan repayment rather than Income Tax or Class 4 National Insurance. The payment deadline and correction route can differ from the payroll deduction. Check the return calculation and tell HMRC or the SLC if the plan, threshold or previous payments have been recorded incorrectly.

Should you make voluntary overpayments?

A voluntary overpayment reduces the balance but does not normally reduce the income-contingent deduction calculated from future earnings. The decision therefore depends on whether the balance would otherwise be repaid before write-off, the applicable interest rate, expected earnings, savings, other debt and the value of keeping cash accessible. Someone with a low expected lifetime repayment may gain little from paying early, while someone certain to repay in full may value reducing interest.

Do not use a balance-only comparison. Model the likely repayment path, interest, write-off date, career breaks, overseas work and salary changes. Keep an emergency fund and clear higher-cost debt before making an irreversible payment. The SLC's terms and your plan determine the result; a salary calculator can show monthly deductions but cannot predict the lifetime value of an overpayment.

Correcting a wrong deduction

If a payslip shows the wrong plan or threshold, first compare it with the starter information, HMRC notice and SLC account. Ask payroll what instruction it used and keep the response. If the issue is the loan record or balance, contact the SLC with the payslips and employment dates. If the annual calculation is wrong because income or Self Assessment information is missing, use the relevant HMRC correction route.

Record the date the error began, every affected pay period, the amount deducted and any refund received. A corrected deduction may not appear immediately in the same form as the original error. Reconcile the year-to-date total and check the next payslip. Do not make a second payment to “catch up” until the official record explains what is outstanding.

Interest Rates by Plan

Interest accrues from the day the loan is first paid and does not by itself change the percentage deducted from income. Plan 2 has income-linked RPI to RPI+3% rules, Plan 5 is normally RPI only, and the Postgraduate Loan is normally RPI+3%, subject to the current cap. Plan 1, Plan 4 and the exact rate period have separate rules. Because write-off and balance outcomes differ by plan, voluntary overpayments should be considered only after checking the exact loan terms, likely repayment horizon and financial alternatives.

Frequently Asked Questions

Run your salary through the Salary Calculator→ to see student loan, tax and NI together, and read the Student Tax guide if you are studying while working.

Official sources

• GOV.UK: How much you repay
• GOV.UK: Rates and thresholds for employers 2026/27
• GOV.UK: Student and Postgraduate Loan deduction tables 2026/27
• GOV.UK: When student loans are written off or cancelled
• GOV.UK: Student loans terms and conditions 2026/27
• GOV.UK: Student loan interest rates and repayment threshold announcement