You repay 9% of your income above your plan’s threshold, and nothing if you earn below it. For 2026/27 the annual thresholds are £26,900 (Plan 1), £29,385 (Plan 2), £33,795 (Plan 4, Scotland) and £25,000 (Plan 5). A postgraduate loan is repaid at 6% above £21,000, on top of any undergraduate repayments.
How repayments are worked out
Repayments are based on what you earn, not on how much you owe. Your employer takes the money through payroll, usually alongside income tax and National Insurance, and sends it to HMRC. If your income falls below the threshold, the deduction stops for that pay period.
The formula is simple: (income − threshold) × 9%. Because it is a percentage of the slice above the threshold, a pay rise increases repayments by only 9p in each extra pound.
Student loan repayments are not tax, so they do not change your income tax or NI, but they do reduce your take-home pay. See How to work out your take-home pay from a UK salary for how each deduction fits together.
Thresholds by plan for 2026/27
| Plan | Annual threshold | Rate above threshold |
|---|---|---|
| Plan 1 | £26,900 | 9% |
| Plan 2 | £29,385 | 9% |
| Plan 4 (Scotland) | £33,795 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgraduate loan | £21,000 | 6% |
Which plan you have depends on where and when you studied and what type of course it was. Your loan statement or Student Loans Company account shows your plan. Check GOV.UK if you are unsure.
Worked example: £40,000 salary
Using the UK take-home pay for an employee in England with no pension:
| Plan | Repayment a year | Take-home a year |
|---|---|---|
| No student loan | £0 | £32,320 |
| Plan 1 | £1,179 | £31,141 |
| Plan 2 | £955 | £31,364 |
| Plan 5 | £1,350 | £30,970 |
| Plan 2 plus postgraduate loan | £2,095 | £30,224 |
You can check Plan 2 by hand: (£40,000 − £29,385) × 9% = £955.35. The postgraduate part is (£40,000 − £21,000) × 6% = £1,140, which added to £955.35 gives £2,095.35.
Notice that Plan 5 costs more than Plan 2 at the same salary, because its threshold is lower. Plan 1 sits in between at this income.
Two loans at once
If you have both an undergraduate loan and a postgraduate loan, repayments for each are taken at the same time. Combined, that means 15% of the income above both thresholds, which can be a noticeable bite. The postgraduate rate applies from £21,000 whatever your undergraduate plan.
What repayments do not tell you
The monthly deduction does not show whether you will clear the loan. Each plan has a time limit after which any remaining balance is written off, and interest is added in the meantime. The details differ by plan, so check GOV.UK or your Student Loans Company statement. Whether to make voluntary overpayments is a personal decision that depends on your plan, balance and other priorities, and is worth checking against official guidance before you act.
Remember that tax and NI are separate deductions: see UK income tax explained: bands, allowance and how it's worked out and National Insurance for employees: what you pay and why.
Note: This is general information, not financial advice. Thresholds and rules can change; check GOV.UK and the Student Loans Company for your plan.
Check your payslip
On a payslip, the student loan line is usually labelled “SL” or “Student loan”. If you are on Plan 1, Plan 2 or Plan 5, the amount should be close to 9% of your pay above the per-period threshold. If a deduction appears when you believe you have repaid your loan, or you have no loan at all, contact your employer’s payroll team and the Student Loans Company promptly so it can be corrected.
Try the calculator
Select your plan, and add the postgraduate loan if you have one, in the UK take-home pay to see the estimated annual repayment and your take-home pay for 2026/27. The tool gives estimates based on a standard tax code.
Open the free UK take-home pay
Step-by-step: how to work out your repayment by hand
You can reproduce your payslip deduction in four steps.
- Find your plan threshold. For 2026/27 this is £26,900 for Plan 1, £29,385 for Plan 2, £33,795 for Plan 4 and £25,000 for Plan 5.
- Take your gross pay for the period. Use annual pay for an annual figure, or the monthly or weekly pay if you are checking one payslip.
- Subtract the threshold for the same period. Employers use a threshold for the pay period, so for monthly pay it is roughly the annual figure divided by 12. For Plan 2 that is about £2,448.75 a month.
- Multiply the excess by 9%. If the result is zero or negative, no repayment is due that period.
For example, someone on Plan 2 earning £32,000 a year has £2,615 above the threshold. Multiplying by 9% gives £235.35 a year, or about £19.61 a month. The take-home pay calculator gives the same £235 in its annual breakdown.
For a postgraduate loan, use £21,000 and 6%. A person on £28,000 with only a postgraduate loan repays (£28,000 minus £21,000) x 6% = £420 a year. Where someone has both types of loan, each is calculated separately and the two amounts are added together.
Worked example 2: how a pay rise changes your repayments
Moving up a salary band increases repayments, but only by 9p for every extra pound. Here is a comparison on Plan 2 and Plan 5, with no pension, for someone living in England. Figures come from the take-home pay calculator.
| Gross salary | Plan | Annual repayment | Take-home a year |
|---|---|---|---|
| £25,000 | Plan 5 | £0 | £21,520 |
| £32,000 | Plan 2 | £235 | £26,324 |
| £32,000 | Plan 5 | £630 | £25,930 |
| £55,000 | Plan 1 | £2,529 | £39,928 |
| £55,000 | Plan 2 | £2,305 | £40,152 |
A few things stand out. At £25,000 a Plan 5 borrower is exactly at the threshold, so nothing is taken. At £32,000, the Plan 5 borrower pays £395 a year more than the Plan 2 borrower, purely because the Plan 5 threshold is £4,385 lower, and 9% of £4,385 is about £395. At £55,000 the gap is smaller: Plan 1’s lower threshold means £224 more is repaid than on Plan 2, since £2,529 minus £2,305 is £224.
The hand check for Plan 1 at £55,000 is (£55,000 minus £26,900) x 9% = £28,100 x 9% = £2,529.
Scotland and Plan 4
Plan 4 applies to loans in Scotland and has the highest threshold of the plans listed here at £33,795. Someone on £30,000 in Scotland with Plan 4 pays nothing towards the loan, because they are below the threshold. Income tax in Scotland uses different bands from the rest of the UK, so see UK income tax explained: bands, allowance and how it's worked out for the rates. The student loan percentage itself is the same 9%.
Common mistakes to avoid
- Thinking repayments are a percentage of the whole salary. Only the slice above the threshold counts.
- Assuming a lower threshold is always worse. It means you start repaying sooner, but whether that matters over a lifetime depends on your balance, interest and the time limit on your plan.
- Confusing the plan with the lender. Your plan comes from where and when you studied, not from your employer or bank.
- Forgetting the postgraduate loan on top. If you have both, the postgraduate deduction is in addition to the undergraduate one, so take-home pay falls by more than people expect.
- Treating the deduction as tax. Student loan repayments do not lower your taxable income, so they do not reduce the income tax or NI you pay. National Insurance for employees: what you pay and why shows how NI is calculated separately.
- Ignoring bonuses. A one-off bonus can push a single pay period above the threshold, so a repayment may be taken that month even if your usual pay is below it.
Self-employed and other income
If you are self-employed or have income outside payroll, repayments are generally dealt with through Self Assessment rather than by an employer. The details depend on your situation, so check GOV.UK. The same principle applies, which is that repayments are linked to income above the plan threshold. See Self-employed tax explained: income tax, National Insurance and payments on account for how self-employed tax works.
When to check with an official source
Interest rates, write-off dates and whether voluntary overpayments make sense are specific to each plan and change over time, so rely on the Student Loans Company and GOV.UK for those. If a payroll deduction looks wrong, ask your employer for the pay-period threshold they have used and compare it with the figure for your plan.
Frequently asked questions
Do I repay my student loan on the whole of my salary?
No. You repay 9% of the amount above your plan’s threshold only, or 6% above £21,000 for a postgraduate loan.
Is my student loan taken before or after tax?
It is calculated on your pay and collected through payroll, but it does not reduce your income tax or NI. It simply comes off your take-home pay.
Which plan am I on?
It depends on where you studied and when you started. Your Student Loans Company account or loan statement states your plan, and GOV.UK has an explainer.
What if I earn less than the threshold in some months?
Employers usually apply the threshold per pay period, so no repayment is taken in a month where you earn below it. Any adjustments over the year depend on your payroll and HMRC processes.
Does my student loan affect my credit score or mortgage application?
Repayments are not a debt in the usual credit-file sense, but lenders may take the deduction into account when judging affordability, because it reduces your take-home pay. Check with the lender.
Do I still pay if I work abroad or am not employed?
Rules differ for people overseas or not on payroll, and may require you to inform the Student Loans Company. Check GOV.UK for your circumstances.
Does a pension contribution reduce my student loan repayment?
It can depend on how the pension is paid, since some methods reduce the pay the loan is based on and others do not. Check with your payroll team or GOV.UK.
Will my loan be written off?
Each plan has a time limit after which any remaining balance is cancelled. The length depends on your plan, so look it up on GOV.UK or your Student Loans Company account.