You've graduated, landed a job, and now there's a line on your payslip that says "student loan" with money disappearing every month. Nobody really explained how this works at university, so here's the version you actually needed.
Student loan repayments in the UK aren't like paying off a credit card or a mortgage. The system is closer to a graduate tax — it comes straight out of your wages, only kicks in when you earn enough, and eventually gets written off whether you've cleared the balance or not.
Which plan you're on depends on when and where you started your course. You don't get to pick.
| Plan | Who | Threshold | Rate | Written Off |
|---|---|---|---|---|
| Plan 1 | England/Wales before Sept 2012, or Northern Ireland | £26,900 | 9% | 25 years from April first due to repay, or age 65 for older loans |
| Plan 2 | England 2012–2023, Wales from 2012 | £29,385 | 9% | 30 years* |
| Plan 4 | Scotland | £33,795 | 9% | 30 years from April first due to repay; older loans may cancel earlier at 65 |
| Plan 5 | England from 2023/24 | £25,000 | 9% | 40 years |
| Postgrad | Postgraduate master's/doctoral loan | £21,000 | 6% | 30 years |
*English students who started from 1 August 2023 are on Plan 5, which has a 40-year write-off period.
Your funding body and course start date determine your plan. Typical England/Wales undergraduate starts before September 2012 and Northern Ireland funding use Plan 1. Check your actual plan. The 2026/27 Plan 1 threshold is £26,900, with 9% repayments above it. Loans first paid from 1 September 2006 cancel 25 years after the April first due to repay; earlier loans cancel at age 65.
Plan 1 starts deductions below Plan 2’s threshold, but Plan 5 and postgraduate thresholds are lower still. Compare repayments using your assigned plan and actual cancellation date; the plan is not a choice you can make to reduce the bill.
This is the one most recent English and Welsh graduates are on. The threshold is higher at £29,385 (2026/27), so you keep more of your pay before repayments begin. You still repay at 9% of earnings above the threshold. The loan gets written off 30 years after the April you were first due to repay. English students who started from 1 August 2023 are on Plan 5 instead, which is written off after 40 years.
Plan 2 loans tend to be much bigger (tuition fees jumped to £9,250/year), and the interest can be eye-watering. But here's the thing most people miss: the balance almost doesn't matter. What matters is how much you earn and for how long. More on that below.
Loans from the Student Awards Agency Scotland generally use Plan 4. The 2026/27 threshold is £33,795 and repayments are 9% above it. Loans first paid from 1 August 2007 cancel 30 years after the April first due to repay. Earlier loans cancel at age 65 or after that 30-year period, whichever comes first. Check SLC cancellation rules.
Plan 5 applies to students who started courses in England from the 2023/24 academic year onwards. The threshold is lower than Plan 2 at £25,000, which means repayments start sooner. The trade-off is that interest is now capped at RPI only (no extra percentage on top), but the write-off period stretches to 40 years. That's a long time to be making repayments.
If you took out a postgraduate master's or doctoral loan, that sits alongside your undergraduate plan. The threshold is £21,000, and you repay 6% of earnings above it. This is separate from your undergrad repayment — so yes, if you have both a Plan 2 loan and a postgraduate loan, both come out of your pay at the same time. 9% plus 6% above the respective thresholds.
Your employer takes it straight from your wages through PAYE, the same system used for income tax and National Insurance. You don't get a bill. You don't choose to pay. It just happens automatically, every payday.
If you earn below the threshold for your plan, you pay nothing. Not a penny. And if your earnings dip below the threshold later — say you go part-time or take a career break — repayments stop until you're earning above it again.
Let's say you're on Plan 2 and earning £32,000 a year. Here's the maths:
This annual-average illustration is not an exact payslip deduction. Payroll uses pay-period thresholds and whole-pound rounding, so monthly deductions can differ.
This is the single most important thing to understand. Your student loan does not appear on your credit file. It doesn't affect your credit score. Mortgage lenders can see it on your payslip (it reduces your take-home pay), but it's not treated as debt in the way a car loan or credit card balance would be.
The balance might look terrifying — £50,000 or more — but that number is largely irrelevant for most graduates. What matters is your monthly repayment, which is based entirely on what you earn, not what you owe.
Extra repayments can reduce interest if you would otherwise repay the loan in full before cancellation. If a balance would instead be written off, an extra payment may not reduce your future income-based deductions. The outcome depends on your balance, earnings, interest and remaining term; no plan alone settles the decision.
Check your SLC balance and cancellation date, then model realistic earnings scenarios using the student loan calculator or Plan 1 versus Plan 2 comparison. GOV.UK states that voluntary extra repayments cannot normally be refunded.
Enter your salary and plan type to see how much comes off your pay each month.