How student loan repayments work
UK student loans behave more like a graduate tax than a normal debt. This guide explains the plans, thresholds, interest and the write-off, and why overpaying often doesn't pay.
9% above a threshold
You repay 9% of everything you earn above your plan's threshold (6% for postgraduate loans, payable on top). It's collected automatically through PAYE or Self Assessment. If your income drops below the threshold, repayments stop. The balance and interest are largely irrelevant to what you pay each month, only your income matters, which is why it feels like a tax.
Which plan are you on?
Your plan depends on when and where you studied. Thresholds for 2025/26 are roughly: Plan 1 £26,065, Plan 2 (English/Welsh students 2012 to 2023) £28,470, Plan 4 (Scotland) £32,745, and Plan 5 (from 2023) £25,000. Postgraduate loans repay at 6% above £21,000. If you have both an undergraduate and postgraduate loan, you pay both simultaneously.
When the loan is cancelled
Any remaining balance is written off after a set period: Plan 2 30 years after you became eligible to repay, Plan 5 40 years, Plan 1 around 25 years (or age 65 for older loans), and Postgraduate 30 years. Many borrowers, especially lower and middle earners, never repay the full amount before it's cancelled, which changes the maths on overpaying.
Overpaying often doesn't pay
How interest is set
Interest varies by plan and is linked to RPI inflation (Plan 2 historically RPI plus up to 3% depending on income; Plan 1, 4 and 5 at lower rates). High interest can make the balance grow faster than repayments for some borrowers, but because of the write-off, that often doesn't increase what you actually pay. Focus on your repayment (income-driven), not the headline balance.
Common mistakes
- Overpaying when you'll be written off. Most borrowers shouldn't overpay, it just costs more than the automatic deductions.
- Worrying about the balance. What you pay depends on income, not balance. The balance only matters if you'll clear it early.
- Forgetting it stops below the threshold. Repayments pause automatically if your income falls below the plan threshold.
- Not checking your plan. Paying on the wrong plan threshold can over- or under-deduct. Confirm your plan with the SLC.