In one paragraph: UK student loans are income-contingent — you repay only when earning above the threshold for your plan. For 2026/27 the thresholds are £26,065 (Plan 1), £28,470 (Plan 2), £32,745 (Plan 4 Scotland), £25,000 (Plan 5), and £21,000 (Postgraduate). Repayment rate is 9% above threshold (6% for Postgrad). Each plan writes off at 25 or 30 years. About half of borrowers never repay in full — for them the loan is effectively a graduate tax. Overpayment helps only those who would otherwise repay in full before write-off.
The 5 UK student loan plans at a glance
| Plan | Covers | 2026/27 threshold | Rate | Write-off |
|---|---|---|---|---|
| Plan 1 | England + Wales pre-Sep 2012; NI any year | £26,065 | 9% | 25 years / age 65 |
| Plan 2 | England + Wales Sep 2012 – Jul 2023 | £28,470 | 9% | 30 years |
| Plan 4 | Scotland 1998 onwards | £32,745 | 9% | 30 years |
| Plan 5 | England Aug 2023 onwards | £25,000 | 9% | 40 years |
| Postgraduate | Master's / PhD from Aug 2016 | £21,000 | 6% | 30 years |
If you have both an undergraduate plan and a Postgraduate loan, you make both deductions simultaneously — see the PGL page for the combined-deduction math.
How to find out which plan you're on
Three methods, fastest first:
- SLC online account. Sign in at gov.uk/sign-in-to-manage-your-student-loan-balance-online. The plan is shown on your dashboard.
- Country and start date logic. Use the table above. England + post-Sep-2012 + pre-Aug-2023 = Plan 2. Anything from August 2023 in England = Plan 5. Scotland (any year since 1998) = Plan 4. Northern Ireland = Plan 1.
- Payslip clue. Your payslip should show "Student loan plan" with the number. If your employer doesn't know, check the SLC account first.
The fundamental decision: should I overpay?
This question matters more than which plan you're on. The framework:
- If your realistic lifetime earnings won't clear the balance before write-off: overpaying is wasted money. You'd be paying voluntary tax. This applies to most Plan 2 and Plan 5 borrowers with average earnings.
- If you'll clear it within the write-off window: overpaying may save money on interest. The higher the interest rate vs your alternatives, the more it makes sense.
- Even if you'll clear it: tax-relieved alternatives (workplace pension match, ISA contributions, mortgage overpayment in some cases) often beat loan overpayment. Run the comparison.
Use our student loan calculator to model your projected balance trajectory.
How interest works on each plan
- Plan 1: lower of RPI or Bank Rate + 1%. Usually the bank-rate cap binds. Currently ~5%. Full Plan 1 details →
- Plan 2: RPI to RPI+3% sliding scale by income, capped at "prevailing market rate". Full Plan 2 details →
- Plan 4: lower of RPI or Bank Rate + 1% — like Plan 1 but with higher threshold. Full Plan 4 details →
- Plan 5: RPI only — the lowest-rate plan. Full Plan 5 details →
- Postgraduate: RPI + 3% throughout, with prevailing-rate cap. Full PGL details →
Working abroad: what happens to repayments
Moving overseas does NOT cancel your obligation. You must:
- Notify the SLC of your move and country of residence.
- Earnings thresholds are converted to the destination country's currency and adjusted for cost-of-living — the actual repayment threshold may differ significantly from the UK figure.
- You make repayments directly to the SLC (not via overseas PAYE).
- Failure to declare can lead to default and HMRC default-charge penalties.
The HMRC published threshold conversions are updated annually — find them at gov.uk/repaying-your-student-loan/overseas-employment.
Tax planning interactions
- Salary sacrifice into pension reduces gross earnings — and therefore your student loan deduction. For a higher-rate payer, every £100 sacrificed saves ~£9 of student loan plus pension tax relief.
- Bonus payments can spike PAYE student loan deductions, with adjustments at year-end. The same total income spread evenly produces the same loan deduction over the year.
- Self-employed income is also subject to student loan repayment, calculated through Self Assessment. Cash-basis vs accruals choices affect timing.
- Marriage and Self Assessment: spouse's income does NOT count for your threshold — it's individual, not household.
Common misunderstandings
- "My loan grows even when I'm paying it": yes — when interest exceeds your annual repayment, the balance rises despite payments. This is normal for Plan 2 borrowers in the first few years post-graduation.
- "I should pay it off as fast as possible": not necessarily. See the overpay decision tree above. Workplace pension match almost always beats loan overpayment.
- "It affects my credit rating": no. Student Loan repayment is collected through PAYE and doesn't appear on credit files in the UK.
- "It affects my mortgage application": sort of. Lenders see the monthly repayment as a deduction from disposable income. They don't worry about the underlying balance. Choose lenders carefully if you have a large loan.
- "I'll lose my pension if I don't repay": no. The loan and the State Pension are unconnected.
When does the loan get written off?
| Plan | Write-off trigger |
|---|---|
| Plan 1 (pre-2006) | Age 65 |
| Plan 1 (post-2006) | 25 years after first April liable |
| Plan 2 | 30 years after first April liable |
| Plan 4 | 30 years after first April liable |
| Plan 5 | 40 years after first April liable |
| Postgraduate | 30 years after first April liable |
| All plans | Death or permanent disability |
Bankruptcy does not write off student loans in the UK.
Tools and deeper guides
- Student loan calculator — run the math for any plan + earnings combination
- Plan 1 explained
- Plan 2 explained — overpayment strategy
- Plan 4 (Scotland) explained
- Plan 5 — the overpayment trap
- Postgraduate Loan — combined deductions math
Sources
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.