Student loan repayments are one of the most misunderstood deductions on UK payslips. Many graduates don't know which plan they're on, how much they're repaying, or when their loan will be written off.
This guide covers everything you need to know.
See your student loan deductions
Select your loan plan in the calculator to see your exact monthly repayment.
How student loan repayments work
Student loan repayments in the UK are income-contingent — you only repay when your income exceeds a threshold, and the amount is a percentage of earnings above that threshold, not a fixed monthly payment.
Repayments are collected through PAYE (Pay As You Earn) alongside income tax and NI, deducted directly from your payslip.
The four repayment plans
Plan 1
- Who: Students who started before September 2012 (England/Wales), or Scottish/Northern Irish students who started before 1998
- Threshold: £24,990/year (£2,082.50/month) in 2024/25
- Rate: 9% of earnings above the threshold
- Write-off: Age 65, or 25 years after first repayment
Plan 2
- Who: English/Welsh students who started on or after 1 September 2012
- Threshold: £27,295/year (£2,274.58/month) in 2024/25
- Rate: 9% of earnings above the threshold
- Write-off: 30 years after first repayment
Plan 4 (Scotland)
- Who: Scottish students who started on or after 1 September 1998
- Threshold: £31,395/year (£2,616.25/month) in 2024/25
- Rate: 9% of earnings above the threshold
- Write-off: Age 65, or 30 years after first repayment
Postgraduate Loan (PGL)
- Who: Postgraduate Master's or Doctoral loan borrowers
- Threshold: £21,000/year (£1,750/month) in 2024/25
- Rate: 6% of earnings above the threshold
- Write-off: 30 years after first repayment
If you have both an undergraduate loan and a Postgraduate Loan, you repay both simultaneously. The rates are applied separately to the same income above each threshold.
How much will you repay?
Example: Plan 2, salary £35,000
- Earnings above threshold: £35,000 − £27,295 = £7,705
- Annual repayment: £7,705 × 9% = £693/year
- Monthly deduction: £57.75/month
Example: Plan 2 + Postgraduate Loan, salary £35,000
- Plan 2: £693/year (as above)
- PGL: (£35,000 − £21,000) × 6% = £840/year
- Total: £1,533/year (£127.75/month)
Does salary sacrifice reduce student loan repayments?
This is a common question — and the answer depends on your plan.
For Plans 1, 2, and 4: Repayments are based on gross pay before salary sacrifice. So salary sacrifice does not reduce your student loan repayments.
For Postgraduate Loans: Same — based on gross pay before sacrifice.
Unlike income tax and NI, student loan repayments are not reduced by salary sacrifice. The threshold comparison uses your pre-sacrifice gross salary.
This is an important distinction when calculating your true take-home pay. Our calculator handles this correctly — student loan deductions are applied to gross pay regardless of sacrifice amount.
Will you ever pay off your loan?
For many Plan 2 borrowers, the answer is no — and that's by design. The system is structured so that lower earners repay less and have the balance written off after 30 years.
Key insight: For Plan 2 borrowers who won't repay in full, making voluntary overpayments is usually a poor financial decision. The marginal repayment rate (9%) is effectively a graduate tax, not a traditional debt.
If you're a Plan 2 borrower unlikely to repay in full, focus on maximising salary sacrifice for pension savings rather than overpaying your student loan. The pension savings are guaranteed; the loan will be written off anyway.
How to check which plan you're on
- Check your payslip — the deduction will be labelled "Student Loan" with a plan number
- Log in to the Student Loans Company at slc.co.uk
- Check your P60 — it shows total student loan deductions for the year
What if you're on the wrong plan?
If your employer is deducting under the wrong plan, contact your payroll department. They should have received a Start Notice (SL1) from HMRC specifying your plan. If the wrong plan is being applied, you may be overpaying or underpaying.
Summary
- Student loan repayments are 9% (Plans 1/2/4) or 6% (PGL) of earnings above the threshold
- Repayments are collected through PAYE alongside tax and NI
- Salary sacrifice does NOT reduce student loan repayments
- Plan 2 borrowers unlikely to repay in full should prioritise pension savings over loan overpayments
- Check your plan via your payslip or the Student Loans Company
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