Plan 1 in one paragraph: for 2026/27 you repay 9% of any gross earnings above £26,065. Interest rate is the lower of RPI or Bank Rate + 1%, currently meaning it tracks Bank Rate + 1%. Outstanding balance is written off 25 years after the April you first became liable to repay (or age 65 for pre-September-2006 starters in England and Wales).
Who is on Plan 1?
You're on Plan 1 if any of these apply:
- England or Wales: you started an undergraduate course before 1 September 2012.
- Northern Ireland: any undergraduate cohort since 1998, including new starters today. (Northern Ireland did not switch to Plan 2.)
- England, transferred from Scotland after Scottish Plan 1 ended.
You can check which plan you're on in your Student Loan Company account.
The 2026/27 repayment math
Plan 1 is income-contingent. You repay 9% of every pound you earn above £26,065 per year — or weekly equivalent £501.
| Gross annual earnings | Annual repayment | Monthly repayment |
|---|---|---|
| £25,000 | £0 | £0 |
| £30,000 | £354 | £29 |
| £40,000 | £1,254 | £104 |
| £55,000 | £2,604 | £217 |
| £75,000 | £4,404 | £367 |
Repayments come out of your gross pay through PAYE if you're employed, or via your Self Assessment if you're self-employed.
How interest works under Plan 1
Plan 1 interest is set by HM Treasury formula: the lower of RPI (March of prior year) or Bank of England Bank Rate + 1%. In a high-Bank-Rate environment the Bank-Rate+1% leg can bind; in low-rate environments RPI tends to dominate. Since March 2023, with Bank Rate at 4.75-5.25% and RPI well above that, the rate has been capped by Bank Rate + 1%.
The interest accrues daily on the outstanding balance from the day you take the loan. There is no holiday before graduation — interest accrues throughout study, just not at a punitive real rate.
When the loan is written off
Plan 1 writes off at:
- 25 years from the April after you first became liable to repay (most current Plan 1 borrowers).
- Age 65 for borrowers who started an undergraduate course before September 2006 in England or Wales.
The loan also writes off on death or on permanent disability. Bankruptcy does not write it off — student loan debt survives bankruptcy.
Should I overpay Plan 1?
For most Plan 1 borrowers, the answer is almost certainly no, for the same reason as Plan 5: it works like a graduate tax, not a normal loan. Most borrowers will:
- Repay only what their income forces them to via PAYE
- Have remaining balance written off at 25 years
Overpayments only "save you money" if you would otherwise have repaid the loan in full before the 25-year (or age-65) write-off. The clearest case for overpaying:
- You have a small balance (under ~£10,000) and consistent high income (£60k+) that means you'd repay in full anyway
- You'd rather have it gone for psychological reasons and you've maxed pension and ISA contributions already
For everyone else, overpaying Plan 1 is equivalent to paying tax voluntarily on income that wouldn't otherwise have been taxed.
Worked example: £45,000 earner, current Plan 1 balance £18,000
Salary £45,000. Repayment: (45,000 − 26,065) × 9% = £1,704/year via PAYE.
If you stay at this salary in real terms for the next 20 years, you'd repay £1,704 × 20 = £34,080. Add interest at ~5% on a declining balance, and the loan would clear in approximately 12-14 years — before the 25-year write-off.
In that scenario, overpaying could legitimately save money. But change the assumption to "I'll take a 3-year career break" or "I'll go part-time in 5 years" and the math swings back to no-overpay. Use the student loan calculator to model your actual circumstances.
Common Plan 1 mistakes
- Confusing Plan 1 with Plan 2. The two plans look similar in deduction mechanics but have different thresholds and different interest formulas. Check your SLC account before optimising for one when you have the other.
- Repaying voluntarily after a salary drop. When your income drops below the threshold, PAYE stops deductions automatically. Some borrowers continue voluntary payments through habit — effectively converting non-taxable income into student loan payments unnecessarily.
- Missing the year-end refund. If your annual earnings end up below the threshold despite some months being above it (e.g., you left work mid-year), you can claim a refund of overpaid PAYE student loan deductions via the SLC.
- Treating it as a regular debt for mortgage purposes. Mortgage lenders consider Plan 1 repayments as deductions from disposable income, but typically don't worry about the underlying balance.
Sources
Related content
- Student loan repayment calculator — runs the math for any plan + earnings combination
- Plan 1 explained — pre-September-2012 starters in England, Wales and NI
- Plan 2 explained — September 2012 to July 2023 starters in England + Wales
- Plan 4 (Scotland) explained — Scottish students from 1998
- Postgraduate Loan explained — Master's and PhD loans, separate threshold
- Plan 5 overpayment trap — why most Plan 5 borrowers should not overpay
How UK Tax Drag holds itself to account
Every page is reviewed against the editorial standards, written from primary sources, sourced openly, and corrected publicly. No affiliate revenue. No sponsored content. No paid placements.