See your monthly repayments, total repaid and write-off projection — for all UK loan plans.
| Loan plan | — |
| Repayment threshold | — |
| Approximate interest rate | — |
| Monthly repayment (current salary) | — |
| Annual repayment (current salary) | — |
| Loan balance | — |
| Estimated years to clear | — |
| Year | Salary | Monthly | Interest | End Balance |
|---|
UK student loans are not like commercial loans. Repayments are calculated as a percentage of your income above a set threshold — not based on your total loan balance. If you earn below the threshold in any given year, you make no repayment that year regardless of the size of your debt.
| Plan | Repayment threshold | Rate | Interest rate | Write-off | Who it applies to |
|---|---|---|---|---|---|
| Plan 1 | £24,990/yr | 9% | ~3.1% (RPI or BoE+1%) | 25 years | Started before Sep 2012 |
| Plan 2 | £27,295/yr | 9% | RPI to RPI+3% (income-based) | 30 years | Sep 2012 – Jul 2023 starters |
| Plan 4 | £31,395/yr | 9% | ~3.1% (RPI or BoE+1%) | 30 years | Scottish-domiciled (SAAS) |
| Plan 5 | £25,000/yr | 9% | ~3.1% (RPI only) | 40 years | Started from Aug 2023 (England) |
| Postgrad | £21,000/yr | 6% | ~6.1% (RPI+3%) | 30 years | Master's or Doctoral loan |
Thresholds and interest rates are updated annually. RPI rates are approximate for 2026 and will change each September. Thresholds apply to earnings in England, Wales and Northern Ireland — overseas thresholds differ.
Your monthly repayment is calculated as follows:
Monthly repayment = (Annual salary − Threshold) ÷ 12 × repayment rate
For example: a Plan 2 borrower earning £35,000 repays (£35,000 − £27,295) ÷ 12 × 9% = £57.79/month. Repayments are deducted automatically through PAYE by your employer — you do not need to make manual payments while employed in the UK.
Plan 1 and Plan 4: Interest is charged at the lower of RPI or the Bank of England base rate plus 1%. In practice this is typically around 3–4% in 2026.
Plan 2: Interest is income-dependent. While earning below the repayment threshold, interest is charged at RPI only. Between the threshold (£27,295) and an upper threshold (£49,130), interest rises on a sliding scale up to RPI+3%. Above £49,130, interest is RPI+3% throughout.
Plan 5: Interest is charged at RPI only — a simpler and more favourable structure than Plan 2.
Postgraduate Loan: Interest is charged at RPI+3% from the day the loan is paid out, while studying and throughout repayment.
Most Plan 2 and Plan 5 borrowers will never repay their loan in full. At typical graduate salaries and salary growth rates, the outstanding balance grows (or shrinks slowly) for many years before eventually being written off. This means Plan 2 and Plan 5 loans function economically more like a graduate income surcharge than a traditional loan — you pay a fixed percentage of earnings above the threshold for a set number of years, after which the debt disappears.
This has a counterintuitive implication: for most Plan 2 and Plan 5 borrowers, making voluntary overpayments is not financially beneficial. If your loan is destined to be written off, overpayments reduce the balance that would have been cancelled — you pay more in total than you would have otherwise.
Overpaying can be rational if you are a higher earner who is mathematically certain of clearing the full loan within the write-off period. For Plan 1 borrowers (25-year write-off, lower interest), overpaying is more commonly worthwhile than for Plan 2 or Plan 5. Always run the numbers before making voluntary repayments — the decision depends on your salary trajectory, loan size, interest rate and time remaining.
Three realistic UK scenarios calculated using 2026/27 thresholds and an approximate RPI of 3.1%.
Jake's example illustrates the "graduate tax" reality of Plan 2: his salary only crosses the threshold modestly in early years, interest accrues faster than repayments, and the remaining balance is written off after 30 years. He repays £28,535 in total — far less than the £47,000 borrowed plus interest. Not financial advice.