Project your monthly deductions, total interest paid, and whether your loan will be written off. Works for Plan 1, Plan 2, Plan 4, Plan 5 and Postgraduate loans. Updated for 2026/27 tax year.
A UK student loan is not a traditional loan. It is a 9% graduate tax on earnings above the repayment threshold. You only pay when you earn above the threshold. It does not appear on your credit file. It stops when your salary falls below the threshold, even if you still owe money. After 30 or 40 years (depending on the plan), whatever remains is written off — which means for many borrowers, the amount written off is much larger than what they repaid. Understanding this changes the calculation entirely.
This table shows your projected balance, salary and repayments for each year of the loan.
| Year | Age | Salary | Annual repayment | Interest accrued | Balance |
|---|
Each plan has different thresholds, interest rates and write-off periods. Most borrowers are on Plan 2 or Plan 5. These figures are correct for the 2026/27 tax year.
| Plan | Repayment threshold | Repayment rate | Interest rate (typical) | Write-off period |
|---|---|---|---|---|
| Plan 1 | £26,065 | 9% | BoE base + 1% (~6.25%) | 25 years |
| Plan 2 | £28,470 | 9% | RPI to RPI+3% (~7.3%) | 30 years |
| Plan 4 (Scottish) | £32,745 | 9% | BoE base + 1% (~6.25%) | 30 years |
| Plan 5 (from Aug 2023) | £25,000 (frozen to 2027) | 9% | RPI only (~4.3%) | 40 years |
| Postgraduate | £21,000 | 6% | RPI+3% (~7.3%) | 30 years |
Repayment begins on the April after you finish your course (or 4 years after you start the course for Plan 5), regardless of whether you have a job. If you earn below the threshold, you pay nothing, but the months still count towards the 25/30/40-year write-off clock.
Interest rates vary by plan and are set by the government each April. Plan 1 and Plan 4 usually track Bank of England base rate + 1%. Plan 2 and Postgraduate track RPI (Retail Price Index inflation) up to RPI+3%, depending on your salary. Plan 5 uses RPI only, making it significantly cheaper over time if inflation stays low. Interest accrues daily and is charged monthly, compounded into your balance.
For most borrowers, voluntary overpayment is money given to the Treasury. If your salary trajectory means the loan will be written off with money still outstanding, paying extra early is worse than putting that money into an ISA or pension, where you keep the tax relief and investment growth. Only overpay if you are certain you will clear the loan before write-off, or you earn very high income now and want to avoid the psychological burden.
Overpayment decisions depend entirely on your personal circumstances:
Pension contributions via salary sacrifice reduce your gross pay for the student loan repayment calculation. If you earn £40,000 and contribute £5,000 into a workplace pension via salary sacrifice, your loan repayment is calculated on £35,000 gross. This is a triple win: you get tax relief on the way in (£1,250 at 25% basic rate), the loan bill drops by £450/year (9% of £5,000), and the pension grows tax-free. This is one of the best tax moves available to UK workers.
Many employers match workplace pension contributions up to 3-6%. This is free money and reduces your student loan bill at the same time. If your employer offers matching, salary sacrifice into the pension is a no-brainer.
Student loan repayment does not stop when you leave the UK. You remain liable for the loan indefinitely, and it is assessed on your worldwide income. If you work overseas and are paid to a UK bank account, you are assessed on that UK income. If you work abroad and are paid abroad, HMRC assesses your liability based on your UK status and overseas income. Failure to repay can lead to enforcement action and sanctions. Speak to the Student Loans Company before moving permanently.
Working abroad does not write off your student loan or stop interest accrual. You must stay registered with the Student Loans Company and declare your overseas income. Non-payment leads to debt collection, CCJs and passport controls. Take legal advice if you plan to work overseas long-term.
PAYE employees: Repayment is deducted automatically from your payslip each month (via PAYE coding). You see it come out and do not need to do anything extra.
Self-employed: Repayment is assessed via your Self-Assessment tax return each year. You must declare your profits, and the loan repayment is calculated by HMRC. Payment is due by the tax deadline (31 January). If you owe over £3,000 at the end of the tax year, you may also need to make payments on account (advance payments towards next year's bill).
Income tax calculator — net pay and tax code · Salary sacrifice calculator — pension contributions and tax relief · Pension calculator — retirement projection · Compound interest calculator — ISA and investment growth.
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