How UK student loan repayments work
Who this guide is for: For employees with Plan 1, 2, 4 or 5 loans and anyone with a postgraduate loan deducted through PAYE.
Most UK student loans are repaid as a percentage of income above a threshold, not as a fixed monthly bill. When you are employed, your employer deducts repayments through PAYE alongside Income Tax and National Insurance — only when your earnings exceed the threshold for your plan.
Plans and thresholds for 2026/27
| Plan | Annual threshold | Rate | Typical cohort / region |
|---|---|---|---|
| Plan 1 | £26,900.00 | 9% | Older England and Wales loans; some Northern Ireland loans |
| Plan 2 | £29,385.00 | 9% | England and Wales undergraduates from 2012 |
| Plan 4 | £33,795.00 | 9% | Scottish undergraduate loans |
| Plan 5 | £25,000.00 | 9% | Newer English undergraduate loans |
| Postgraduate Loan | £21,000.00 | 6% | Separate from undergraduate plans |
Worked example
Plan 2 employee on £32,000
Tax year 2026/27 · England · tax code 1257L · no pension · Plan 2 only · NI category A. Figures from the shared engine.
| Gross salary | £32,000.00 |
|---|---|
| Plan 2 threshold | £29,385.00 |
| Repayment at 9% (key figure) | £235.35 |
Payroll uses pay-period thresholds. This annual estimate matches the calculator under the same inputs.
Estimate take-home pay with your student loan plan Use the Income Tax Calculator
To work from a target net amount, use the Net to Gross Salary Calculator. PAYE collection is explained in PAYE Explained.
Common misunderstandings
- Repayments clear the loan quickly. Many borrowers will not repay the full balance before write-off, depending on plan and balance.
- Student loan is a tax. It is a repayment obligation collected like tax but with different rules and thresholds.
- Payroll stops the day the balance clears. Do not rely on that — reporting delays are common.