How UK student loan repayments work
A UK student loan is not repaid like a bank loan. There is no fixed monthly instalment: your employer deducts 9% of your pay above the threshold for your plan (6% for a Postgraduate Loan) through PAYE, alongside income tax and National Insurance. If you earn less than the threshold, you pay nothing. If you earn more, the payment rises with your salary — never with the size of your balance. Self-employed borrowers pay the same percentage through Self Assessment.
Interest is linked to the Retail Prices Index (RPI). For the year from 1 September 2026 it is 4.1% on Plans 1, 4 and 5; Plan 2 charges between 4.1% and a temporarily capped 6% depending on income; and Postgraduate Loans are capped at 6%. Anything still owed is cancelled after 25, 30 or 40 years depending on the plan, so many graduates — especially on Plan 2 — will never repay the full amount. That makes the monthly deduction more important than the headline balance for most people.
The figures in these articles use the thresholds published on GOV.UK for the 2026/27 tax year and the interest rates announced by the Student Loans Company on 10 August 2026. Take-home pay comes from our UK salary after tax pages (England, Wales and Northern Ireland).
FAQ
How much student loan will I repay each month?
You repay 9% of your income above your plan’s threshold (6% above £21,000 for a Postgraduate Loan). In 2026/27 the thresholds are £26,900 for Plan 1, £29,385 for Plan 2, £33,795 for Plan 4 and £25,000 for Plan 5. On £35,000, for example, that is £42 a month (£504 a year through payroll) on Plan 2.
What are the student loan thresholds for 2026/27?
Plan 1 £26,900 a year (£2,241 a month), Plan 2 £29,385 (£2,448), Plan 4 £33,795 (£2,816), Plan 5 £25,000 (£2,083) and the Postgraduate Loan £21,000 (£1,750), from 6 April 2026 to 5 April 2027.
What is the student loan interest rate now?
From 1 September 2026 to 31 August 2027: Plan 1 and Plan 5 4.1%; Plan 2 between 4.1% and 6% depending on income (the normal maximum of 7.1% is capped at 6% this year); Postgraduate Loans 6% (capped from 7.1%). RPI for March 2026 was 4.1%.
When is my student loan written off?
Plan 1 after 25 years (or at 65 for older loans), Plan 2 and Plan 4 after 30 years, Plan 5 after 40 years, and Postgraduate Loans after 30 years — counted from the April you were first due to repay.
Do I repay if I earn less than the threshold?
No. If your pay in a pay period is below the threshold nothing is deducted, and if your total income for the tax year was below the threshold you can claim back anything that was deducted.
Sources
- GOV.UK, Repaying your student loan – what you pay: 2026/27 thresholds Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000, Postgraduate Loan £21,000; 9% (6% for PGL) of income above the threshold; rules for more than one plan (read 3 November 2026).
- Student Loans Company / Department for Education, Student loans interest rates and repayment threshold announcement, 10 August 2026: RPI 4.1%; Plan 1 4.1%; Plan 2 4.1%–7.1% capped at 6%; Plan 3 (Postgraduate) capped at 6%; Plan 5 4.1% (1 Sep 2026 – 31 Aug 2027); Plan 1 threshold £28,005 from 6 April 2027.
- Department for Education press release, Interest rate cap introduced to protect Plan 2 borrowers, 7 April 2026, and written ministerial statement of 13 April 2026: 6% cap for 2026/27; Plan 2 upper interest threshold £52,885 from 6 April 2026.
- Autumn Budget 2025 (26 November 2025): Plan 2 repayment threshold frozen at £29,385 for 2027/28 to 2029/30 (reported by Which?, 5 December 2025).
- Take-home pay: HMRC 2026/27 income tax and National Insurance for England, Wales and Northern Ireland (personal allowance £12,570, 8%/2% employee NI), as used on our UK salary after tax pages.