Postgraduate Loan in one paragraph: available for Master's and Doctoral study from August 2016. For 2026/27, threshold £21,000 (the lowest of any UK student loan), repayments at 6% above that, interest at RPI + 3% throughout, 30-year write-off. Critically, PGL repayments are additional to any undergraduate loan repayments — many borrowers find themselves making both deductions on the same payslip.
Who can take a Postgraduate Loan?
- Master's degree: taught or research Master's at a UK university, from August 2016. Up to £12,471 in 2026/27 (England) or equivalent country thresholds.
- Doctoral degree (PhD): from August 2018. Up to £29,390 in 2026/27 (England) over the typical 3 years of study.
- You must usually be under 60 when starting (some exceptions for shorter courses).
- You must be an eligible UK or Irish citizen, settled or pre-settled status holder.
The Postgraduate Loan is paid directly to you (not the university) to cover both fees and living costs.
The 2026/27 repayment math
6% of gross earnings above £21,000 per year. Lower rate than undergraduate plans (9%) but with a much lower threshold.
| Gross annual earnings | PGL repayment | Monthly |
|---|---|---|
| £21,000 | £0 | £0 |
| £30,000 | £540 | £45 |
| £45,000 | £1,440 | £120 |
| £60,000 | £2,340 | £195 |
| £85,000 | £3,840 | £320 |
The combined PGL + undergraduate deduction trap
This is the most-misunderstood feature of PGL: if you have a Plan 1, 2, 4 or 5 undergraduate loan AND a Postgraduate Loan, you make both repayments simultaneously through PAYE. They do not replace each other.
Worked example: graduate with Plan 2 (threshold £28,470) and Postgraduate Loan (threshold £21,000), earning £45,000:
- Plan 2: (45,000 − 28,470) × 9% = £1,488/year
- PGL: (45,000 − 21,000) × 6% = £1,440/year
- Total student loan deduction: £2,928/year (£244/month)
That's 6.5% of gross income disappearing into student loan repayments before income tax and NI. The effective yee already in ba above the higher of the two thresholds for an employee already in basic-rate income tax is:
- Income tax: 20%
- National Insurance: 8%
- Plan 2: 9%
- PGL: 6%
- Combined: 43% marginal rate — equivalent to higher-rate territory while still on basic-rate income tax.
How PGL interest works
Postgraduate Loan interest is fixed at RPI (March of prior calendar year) + 3%, without the income-linked variation that Plan 2 has. There's no Bank Rate cap as on Plan 1 and Plan 4, but the same "prevailing market rate" cap applies as on Plan 2.
In high-RPI environments, PGL interest can be punishing — 8% or higher. Combined with the relatively small balance (typically £10,000-£25,000 for a Master's), this means many PGL borrowers do repay in full before the 30-year write-off, particularly if they pursue typical Master's-graduate career paths (consulting, finance, tech).
Should I overpay the PGL?
For PGL, the overpayment math is more often "yes" than for undergraduate loans:
- The balance is typically smaller (£10-25k), so you'll likely repay in full within 30 years
- Interest at RPI+3% with no income cap can compound expensively
- Repayment is 6% (vs 9% on undergrad), so PAYE-mediated repayments are slower
The standard priority order still applies: workplace pension match > ISA > pension top-up > PGL overpayment > mortgage overpayment. But within the loan-overpayment category, PGL is more often worth attacking than undergraduate plans.
One specific case where PGL overpayment is clearly worthwhile: you have both an undergraduate loan and a PGL, and you're going to repay both in full. Overpaying the PGL first (higher interest) is more efficient than overpaying Plan 2 or Plan 5.
Worked example: Master's graduate, £15,000 PGL balance, £42,000 salary
Balance £15,000. Salary £42,000 growing at 3% nominal. RPI 3.5%, so PGL interest at ~6.5% (capped at prevailing rate of, say, 7%).
- Year 1 repayment: (42,000 − 21,000) × 6% = £1,260
- Year 1 interest: 15,000 × 7% = £1,050
- Net Year 1: balance falls to ~£14,790
- By year 5, salary ~£48,700, repayment ~£1,662, interest declining as balance shrinks
- Projected payoff: roughly year 10-12 before the 30-year write-off
Total repaid: roughly £18,500 over 11 years for a £15,000 balance — a modest premium of £3,500 in nominal interest. Reasonable outcome for the PGL.
Common PGL mistakes
- Not realising you owe two student loans simultaneously. Many Master's-fresh graduates don't notice the combined ~6.5% gross income deduction until they query their payslip.
- Assuming PGL replaces undergrad. It doesn't. They stack.
- Treating PGL like Plan 2. Different threshold, different rate, different interest formula. The decision tree is different.
- Overpaying PGL while in basic-rate pension territory. 40-43% combined marginal rates from PGL + PAYE happen quietly — salary sacrifice into pension recovers the headroom without paying off the loan directly.
- Taking PGL "because it's cheap money" without need. PGL is borrowed at RPI+3%. That's not cheap money compared to a normal market environment — it's competitive with personal-loan rates but more expensive than mortgages.
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
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