Student Loan Repayment Explained: How UK Repayments Work
A UK student loan does not work like a normal loan. You repay a fixed percentage of what you earn above a set threshold, not a fixed monthly amount tied to how much you borrowed. For most plans that is 9% of your income above the threshold, collected automatically through your payslip alongside tax and National Insurance. If your income drops below the threshold, your repayments stop. And whatever is left after a set number of years is written off completely.
That single idea, repayment based on income rather than debt, is what makes student loans behave more like a graduate contribution than a mortgage or a credit card. This guide explains how it all fits together. Enter your salary and plan type below to see roughly what you would repay each month and year.
🎓 Student loan repayments · live
You earn £7,000 above the £25,000 threshold, and repay 9% of that — £53 a month. Earn more and you repay more; earn less and it falls. Anything left is written off 40 years after repayments start.
Estimate based on 2025/26 thresholds. Repayments are collected through PAYE or Self Assessment and are based on income, not the amount borrowed. Interest still accrues separately. Check your balance at gov.uk.
At a glance
- Repayment rate
- 9% of income above the threshold (6% for Postgraduate Loan)
Key Takeaways
- You repay 9% of everything you earn above your plan's threshold (6% on a Postgraduate Loan), so your repayment rises and falls with your income, not your balance.
- Repayments are collected automatically through PAYE by your employer, exactly like Income Tax, so you rarely need to do anything yourself.
- The size of your loan does not change your monthly repayment — only your income does — which is why a big balance can feel less alarming than it looks.
- Any balance still outstanding at the end of your plan's term is written off, and student loans do not appear on your credit file.
How UK student loan repayment actually works
When you take out a student loan through Student Finance, you are borrowing to cover tuition fees and, often, maintenance (living costs). But the repayment rules are set by your plan type, which depends on where and when you started your course, not by how much you owe.
Once you leave your course, you only start repaying in the April after you finish, and only once you earn above the repayment threshold for your plan. Below that threshold, you pay nothing. Above it, you pay a percentage of the excess.
Here are the annual thresholds for 2025/26 (always check the current figures at gov.uk, as they are reviewed each year):
- Plan 1: £26,065
- Plan 2: £28,470
- Plan 4 (Scotland): £32,745
- Plan 5: £25,000
- Postgraduate Loan: £21,000
The maths: 9% above the threshold
The rule most people never quite have explained to them is simple. You do not pay 9% of your whole salary. You pay 9% of the part of your income that sits above the threshold.
Say you are on Plan 2 (£28,470 threshold) earning £34,470. The amount above the threshold is £6,000. Your annual repayment is 9% of £6,000, which is £540, or about £45 a month. Someone on the same plan earning £28,470 or less pays nothing at all.
Postgraduate Loans work the same way but at 6% above £21,000, and if you have both an undergraduate and a postgraduate loan, the two are added together on your payslip.
Because the calculation ignores your balance entirely, two people with wildly different loan sizes but the same salary make identical repayments. Try a few salary figures in the calculator above to see how this scales.
Collected through PAYE, automatically
If you are employed, you almost never have to think about repaying. Your employer deducts the repayment straight from your wages under PAYE, the same system that collects Income Tax and National Insurance, and passes it to HMRC. Your correct plan type should show on your payslip. It is worth checking it is right, because being placed on the wrong plan can mean over- or under-paying. Our guide to tax codes explained covers how PAYE deductions appear on your payslip.
If you are self-employed, repayments are calculated through your Self Assessment tax return instead, based on the same income rules.
Written off after a set number of years
Every plan has a write-off point. Once you reach it, any remaining balance is cancelled and you stop repaying, regardless of how much is left. The periods differ by plan: Plan 1 is written off after around 25 years, Plans 2 and 4 and the Postgraduate Loan after 30 years, and Plan 5 (for English students starting from 2023) after 40 years. Loans are also written off on death.
This matters enormously, because a large share of borrowers never repay their loan in full before it is written off. For them, the loan functions like a time-limited 9% graduate tax. We cover the detail in when is a student loan written off and, for newer starters, Plan 5 student loan explained.
Interest, and why it often doesn't matter
Student loan interest is linked to RPI inflation and varies by plan. It can look alarming, especially on large balances. But because your repayments are fixed at 9% of income above the threshold, the interest rate does not change what you pay each month. It only affects whether you clear the balance before it is written off. For many borrowers who never fully repay, the headline interest rate is largely academic. We unpack this in student loan interest rates explained.
Frequently asked questions
Do student loan repayments come out of my salary automatically?
Yes. If you are employed, your employer deducts repayments through PAYE alongside your tax and National Insurance, so you do not need to arrange anything. If you are self-employed, they are collected through your Self Assessment tax return. Check your payslip shows the correct plan type.
What happens to my student loan if I stop working or earn very little?
Repayments stop automatically whenever your income falls below your plan's threshold. There is no penalty and nothing to arrange — because repayment is a percentage of income above the threshold, earning below it simply means you pay nothing that period.
Does my student loan affect my credit score?
No. UK student loans do not appear on your credit file and are not seen by the credit reference agencies, so they do not affect your credit score. However, the repayments reduce your take-home pay, which lenders do factor into affordability — see does a student loan affect your mortgage.
How do I know which student loan plan I'm on?
Your plan depends on where in the UK you studied and when your course started. You can confirm it by logging into your online account at gov.uk or checking your payslip. Our Plan 1 vs Plan 2 student loan guide explains how to tell them apart.
General information only, not financial advice. Check your plan type and balance at gov.uk.
