If you went to university in the UK, there is a good chance that a chunk of money disappears from your payslip every month and goes towards your student loan. But when people ask "How much am I actually paying back?" or "When does it get written off?", most of them do not really know the answer. And that is not their fault — the system is genuinely confusing.
There are now five different repayment plans running at the same time, each with different thresholds, different interest rates, and different write-off rules. Whether you graduated ten years ago or you are just starting your career, understanding which plan you are on and what it costs you is really important for managing your money properly.
So let us break it all down in plain English.
Which Plan Are You On?
The plan you are on depends on when and where you studied. Here is a quick way to work it out:
- Plan 1: You took out your loan before September 2012 (England and Wales) or you studied in Northern Ireland or Scotland (before 2024).
- Plan 2: You took out your loan on or after September 2012 and studied in England or Wales.
- Plan 4: You studied in Scotland (loans taken out on or after September 1998).
- Plan 5: You started your course on or after 1 August 2023 in England. This is the newest plan.
- Postgraduate Loan: You took out a postgraduate master's or doctoral loan from the Student Loans Company.
If you are not sure which plan you are on, you can check through your online Student Loans Company account, or look at your payslip — it usually shows which plan is being deducted.
How Much Do You Pay Back?
Here is the key thing to understand: you do not pay back a fixed amount each month. Instead, you pay a percentage of everything you earn above a certain threshold. If you earn below the threshold, you pay nothing at all.
For Plans 1, 2, 4, and 5, the repayment rate is 9% of everything you earn above the threshold. For Postgraduate Loans, it is 6% of everything above the threshold.
And if you have both an undergraduate and a postgraduate loan, you pay both at the same time. That means 9% plus 6% — which is 15% of your income above the relevant thresholds. That can be a serious amount of money coming out of your pay.
The Repayment Thresholds for 2025/26
Here are the annual thresholds for the current tax year. You only start repaying once your income goes above these amounts:
- Plan 1: £26,065 per year (£2,172 per month)
- Plan 2: £28,470 per year (£2,372 per month)
- Plan 4: £32,745 per year (£2,729 per month)
- Plan 5: £25,000 per year (£2,083 per month)
- Postgraduate Loan: £21,000 per year (£1,750 per month)
Let us put that into real numbers. Say you are on Plan 2 and you earn £32,000 a year. Your income above the threshold is £32,000 minus £28,470, which is £3,530. You pay 9% of that, which comes to about £318 a year — or roughly £26.50 a month. Not massive, but it adds up over time.
Now say you earn £45,000 on Plan 2. Your income above the threshold is £16,530. At 9%, that is £1,488 a year, or about £124 a month. At that level, it starts to feel like a real deduction.
What Is Changing for 2026/27?
The thresholds do change each year, and some plans are getting a boost from April 2026:
- Plan 1: Rising to £26,900
- Plan 2: Rising to £29,385 — but then it is expected to be frozen at that level for three years from April 2027
- Plan 5: Staying at £25,000
The Plan 2 freeze is worth paying attention to. Just like the frozen personal allowance, if wages go up but the threshold stays the same, you will end up repaying more over time without actually earning more in real terms.
When Does It Get Written Off?
This is the part most people find reassuring. Student loans in the UK are not like normal debts. If you do not pay them off within a certain number of years, the remaining balance gets written off completely. You owe nothing more.
- Plan 1: Written off when you turn 65, or 25 years after the April you were first due to repay (whichever comes first).
- Plan 2: Written off 30 years after the April you were first due to repay.
- Plan 4: Written off 30 years after the April you were first due to repay, or when you turn 65 (whichever comes first).
- Plan 5: Written off 40 years after the April you were first due to repay.
- Postgraduate Loan: Written off 30 years after the April you were first due to repay.
For a lot of people on Plan 2, the reality is that they will never fully pay off their loan before the 30-year write-off kicks in. Research suggests that around 70% of Plan 2 borrowers will still have a balance when the loan is cancelled. So in many cases, the student loan is less like a traditional debt and more like a graduate tax — you pay while you are earning, and eventually it goes away.
Should You Pay It Off Early?
This is a question that comes up a lot, especially when people start earning decent money or receive a lump sum. The answer depends on your situation, but for most people on Plan 2, it is usually not worth paying off early.
Here is why. If you are never going to repay the full balance before write-off, any extra payments you make are essentially money you did not need to spend. You would have been better off putting that money into savings, a pension, or an ISA.
The exception is if you are a high earner who is on track to repay the full loan before the write-off date. In that case, paying it off early could save you interest. But you would need to do the maths carefully — or use a student loan calculator to work it out.
For Plan 1 borrowers, the calculation is different because the interest rate tends to be lower and the loan balances are usually smaller. Some Plan 1 borrowers may find it worthwhile to clear the debt, especially if they only have a few thousand pounds left.
What About Interest?
Interest on student loans can feel unfair, especially when the balance keeps growing even while you are making repayments. The rates vary by plan:
- Plan 1: The lower of the Bank of England base rate plus 1%, or the rate of inflation (RPI). For 2025/26 this sits around 5-6%.
- Plan 2: While studying, interest is RPI plus 3%. After graduating, it ranges from RPI to RPI plus 3%, depending on your income. The maximum rate can be quite high during periods of high inflation.
- Plan 5: RPI only — no extra percentage added. This is one of the improvements the government made with the newer plan.
- Postgraduate: RPI plus 3%.
The interest rates can look scary, but remember — if you are never going to repay the full balance, the interest does not really matter to you in practical terms. It just increases a number that will eventually be written off.
How It Shows Up on Your Payslip
If you are employed, your student loan repayment is deducted automatically through PAYE — just like income tax and National Insurance. Your employer handles it based on your plan type, which HMRC tells them about.
On your payslip, you will usually see a line labelled something like "SL1" (Plan 1), "SL2" (Plan 2), or "PGL" (Postgraduate Loan). The amount will change each month if your earnings fluctuate — for example, if you get overtime or a bonus, you will see a higher deduction that month.
Tips for Managing Your Student Loan
Know your plan. Check your Student Loans Company account to confirm which plan you are on. The threshold and write-off rules are different for each one.
Do not overpay without thinking. Especially on Plan 2, overpaying is often a bad financial decision unless you are a high earner who will clear the full balance.
Check your payslip. Make sure the right plan is being deducted. Mistakes happen — if you are being charged on the wrong plan, you could be paying too much.
Use our calculator. Our student loan calculator lets you see exactly how much is being deducted from your salary each month across all plan types. Plug in your numbers and get a clear picture.
The Bottom Line
Student loan repayments are one of those things that quietly nibble away at your take-home pay without most people ever really understanding how they work. But the system is actually quite fair once you get your head around it — you only pay when you earn above a threshold, the rate is relatively modest, and the debt gets written off eventually.
The most important thing is to know which plan you are on, what your threshold is, and whether it makes sense for your situation to just let the repayments run their course or take more active steps. Either way, knowing the numbers puts you in control.
Try our free salary calculator to see how your student loan fits alongside income tax, NI, and pension deductions — all in one place. Want to compare two job offers and see which one leaves you better off after student loan deductions? Our salary comparison calculator does exactly that.