You have graduated, you have a job, and then your payslip arrives with a line you were not expecting: Student Loan Deduction — £XX. Or perhaps the deduction appeared for the first time this month after a pay rise, or the amount suddenly jumped because you worked overtime.
This guide explains exactly how UK student loan repayments work, what each plan deducts at different salary levels, and why the monthly figure is not always what you might expect. All figures use the confirmed 2026/27 thresholds.
💡 Quick Answer
Student loan repayments in the UK are not based on how much you borrowed. They are a percentage of your earnings above a threshold — deducted automatically from your gross salary via PAYE, in the same way as Income Tax and National Insurance.
For undergraduate loans (Plans 1, 2, 4 and 5): you repay 9% of earnings above your threshold. For the Postgraduate Loan: you repay 6% of earnings above £21,000. Earn below the threshold and you repay nothing — regardless of your loan balance.
In this guide
- 1. How Student Loan Repayments Work
- 2. Plan 1: Pre-2012 England/Wales & Northern Ireland
- 3. Plan 2: England/Wales 2012–2023
- 4. Plan 4: Scotland
- 5. Plan 5: England from August 2023
- 6. Postgraduate Loan
- 7. All Plans: Quick-Reference Table
- 8. Plan 2 vs Plan 5: Key Differences
- 9. How Monthly Deductions Are Calculated
- 10. Bonuses and Overtime: The Hidden Trigger
- 11. Having Both an Undergraduate and Postgraduate Loan
- 12. Salary Examples: £25k to £50k
- 13. Why Was Student Loan Taken When I'm Near the Threshold?
- 14. Common Mistakes When Estimating Deductions
- 15. How Student Loans Affect Your Take-Home Pay
- 16. Check Your Take-Home Pay with Our Calculator
- 17. Frequently Asked Questions
- 18. Summary
1. How Student Loan Repayments Work
UK student loans work more like a graduate contribution than a traditional loan. You do not make fixed monthly payments based on what you borrowed. Instead, you repay a set percentage of your income above a threshold that depends on which loan plan you are on.
Three key principles to understand before anything else:
- Repayments are on income above the threshold — not total income. If the threshold is £29,385 and you earn £35,000, repayments are calculated on £5,615 — not £35,000.
- Deductions are taken through your employer's payroll (PAYE). You do not pay the Student Loans Company directly. Your employer receives a deduction start notice from HMRC and deducts the amount automatically.
- If you earn below the threshold, you repay nothing. No matter how large your loan balance is, you only repay when your income is above the threshold. Periods below the threshold do not affect your loan except that interest continues to accrue.
🔎 How to find your plan type
Your plan appears on your payslip once deductions begin. You can also check your Student Loans Company account at slc.co.uk. If you are unsure, the sections below summarise which plan applies to each cohort. Not sure what your salary looks like after all deductions? Use the take-home pay calculator.
2. Plan 1: Pre-2012 England/Wales and Northern Ireland
Who is on Plan 1?
- Students who started university in England or Wales before September 2012
- All borrowers in Northern Ireland, regardless of when they started
Plan 1 is the oldest loan type and has the most borrower-friendly interest rate — capped at the lower of RPI or the Bank of England base rate plus 1%.
| Threshold (Annual) | Monthly Threshold | Weekly Threshold | Repayment Rate | Write-Off |
|---|---|---|---|---|
| £26,900 | £2,241 | £517 | 9% above threshold | 25 years / age 65 |
🔎 Example — Plan 1 at £35,000
Income above threshold: £35,000 − £26,900 = £8,100
Annual deduction: £8,100 × 9% = £729
Monthly deduction: £729 ÷ 12 = £60.75/month
3. Plan 2: England/Wales Students 2012–2023
Who is on Plan 2?
- Students who started an undergraduate degree in England or Wales between September 2012 and July 2023
- Welsh students starting from September 2012 (Wales retains its own threshold policy but uses the same 2026/27 figure)
Plan 2 is the most common plan for graduates currently in the workforce. The threshold has been set at £29,385 for 2026/27 — and the government has confirmed it will be frozen at this level until April 2030. This means it will not rise with inflation, gradually pulling more graduates into repayment as wages increase.
| Threshold (Annual) | Monthly Threshold | Weekly Threshold | Repayment Rate | Write-Off |
|---|---|---|---|---|
| £29,385 | £2,449 | £565 | 9% above threshold | 30 years |
🔎 Example — Plan 2 at £40,000
Income above threshold: £40,000 − £29,385 = £10,615
Annual deduction: £10,615 × 9% = £955.35
Monthly deduction: £955.35 ÷ 12 = ~£80/month
4. Plan 4: Scotland
Who is on Plan 4?
- All borrowers in Scotland — undergraduate and postgraduate (Scottish postgraduate loans are also collected under Plan 4, not the separate postgraduate scheme)
- Plan 4 replaced Plan 1 for Scottish borrowers in April 2021
Plan 4 has the highest repayment threshold of any undergraduate plan — meaning Scottish graduates start repaying at a higher salary and keep more of their pay below that level.
| Threshold (Annual) | Monthly Threshold | Weekly Threshold | Repayment Rate | Write-Off |
|---|---|---|---|---|
| £33,795 | £2,816 | £649 | 9% above threshold | 30 years |
🔎 Example — Plan 4 at £40,000
Income above threshold: £40,000 − £33,795 = £6,205
Annual deduction: £6,205 × 9% = £558.45
Monthly deduction: £558.45 ÷ 12 = ~£47/month
5. Plan 5: England from August 2023
Who is on Plan 5?
- Students who started an undergraduate course in England on or after 1 August 2023
Plan 5 is the newest undergraduate plan and April 2026 is the first time any Plan 5 deductions have appeared on payslips. If you graduated from a Plan 5 course in summer 2025 or later and have started work, you may be seeing this on your payslip for the first time.
Plan 5 has the lowest repayment threshold of any undergraduate plan at £25,000 — so deductions start at a lower income. In return, the interest rate is more favourable (RPI only, no real interest rate on top) and the write-off period is 40 years rather than 30.
| Threshold (Annual) | Monthly Threshold | Weekly Threshold | Repayment Rate | Write-Off |
|---|---|---|---|---|
| £25,000 | £2,083 | £480 | 9% above threshold | 40 years |
⚠️ Plan 5 graduates: first deductions from April 2026
If you graduated in 2025 and started a job above £25,000, you may see a Plan 5 deduction appearing on your payslip for the first time from April 2026. This is correct — HMRC issues a deduction start notice to your employer and deductions begin automatically. You do not need to do anything.
6. Postgraduate Loan (Plan 3)
Who has a Postgraduate Loan?
- Students who took out a Master's Loan or Doctoral Loan in England or Wales from 2016 onwards
- Note: Northern Ireland postgraduate loans are collected as Plan 1. Scotland postgraduate loans are collected under Plan 4.
The Postgraduate Loan works differently from undergraduate plans in two ways. First, the repayment rate is 6% rather than 9%. Second, the threshold has been frozen at £21,000 since the plan launched in 2016 — it has never increased, meaning a larger proportion of graduates now earn above it.
| Threshold (Annual) | Monthly Threshold | Weekly Threshold | Repayment Rate | Write-Off |
|---|---|---|---|---|
| £21,000 | £1,750 | £403 | 6% above threshold | 30 years |
🔎 Example — Postgraduate Loan at £35,000
Income above threshold: £35,000 − £21,000 = £14,000
Annual deduction: £14,000 × 6% = £840
Monthly deduction: £840 ÷ 12 = £70/month
7. All Plans: Quick-Reference Table
| Plan | Who It Applies To | Annual Threshold | Monthly Threshold | Repayment Rate | Write-Off Period |
|---|---|---|---|---|---|
| Plan 1 | England/Wales before Sep 2012; all Northern Ireland | £26,900 | £2,241 | 9% | 25 yrs / age 65 |
| Plan 2 | England/Wales Sep 2012 – Jul 2023 | £29,385 | £2,449 | 9% | 30 years |
| Plan 4 | All Scottish borrowers | £33,795 | £2,816 | 9% | 30 years |
| Plan 5 | England from Aug 2023 onwards | £25,000 | £2,083 | 9% | 40 years |
| Postgraduate | Master's / doctoral loans, England & Wales | £21,000 | £1,750 | 6% | 30 years |
8. Plan 2 vs Plan 5: Key Differences
If you studied in England and started between September 2012 and July 2023, you are on Plan 2. If you started from August 2023, you are on Plan 5. These two plans look similar but have notably different thresholds and long-term terms.
| Plan 2 | Plan 5 | |
|---|---|---|
| Annual threshold (2026/27) | £29,385 | £25,000 |
| Monthly threshold | £2,449 | £2,083 |
| Repayment rate | 9% | 9% |
| Interest rate | RPI + 0–3% (income-dependent) | RPI only |
| Write-off period | 30 years | 40 years |
| Who pays at £30,000 gross? | ~£5/month | ~£38/month |
| Who pays at £35,000 gross? | ~£42/month | ~£75/month |
| Who pays at £40,000 gross? | ~£80/month | ~£113/month |
📌 The threshold difference matters most at lower salaries
At a salary of £30,000, a Plan 2 borrower pays only ~£5/month because they are barely above the £29,385 threshold. A Plan 5 borrower on the same salary pays ~£38/month — more than seven times as much — because their threshold is £4,385 lower. The gap narrows as salary increases and both borrowers are further above their respective thresholds.
9. How Monthly Deductions Are Calculated
Student loan deductions are calculated per pay period — each month is treated independently. Unlike Income Tax (which is cumulative and looks at your year-to-date earnings), student loan deductions are simply:
The formula
Monthly deduction = (Monthly gross pay − Monthly threshold) × Repayment rate
Where monthly threshold = annual threshold ÷ 12. If monthly gross is below the monthly threshold, the deduction is £0.
This per-period calculation means your deduction can change from month to month if your pay changes. Months with overtime, commission or a bonus can produce larger deductions; months below the threshold produce zero.
To convert your annual salary to a monthly or hourly figure so you can check against these thresholds, use the salary to hourly calculator or the monthly to hourly calculator.
10. Bonuses and Overtime: The Hidden Trigger
This is one of the most common surprises on a payslip. Because student loan deductions are calculated on gross pay in each pay period, any bonus or overtime that pushes your monthly gross above the monthly threshold will trigger a deduction — even if your regular salary is well below the annual threshold.
⚠️ Real example: £28,000 salary on Plan 2 with a £2,000 bonus
Normal months:
Monthly gross: £2,333.33
Plan 2 monthly threshold: £2,448.75
Deduction: £0.00 — below the monthly threshold
The bonus month:
Monthly gross: £2,333.33 + £2,000 = £4,333.33
Above threshold: £4,333.33 − £2,448.75 = £1,884.58
Deduction: £1,884.58 × 9% = £169.61
A single month's bonus triggers nearly £170 of student loan repayment on a salary that normally produces no deduction at all.
The same logic applies to overtime. If your base salary is £24,500 (below the Plan 5 threshold of £25,000) and you work an extra shift worth £200 in a month:
- Monthly gross with overtime: £2,041.67 + £200 = £2,241.67
- Plan 5 monthly threshold: £2,083.33
- Deduction: (£2,241.67 − £2,083.33) × 9% = £14.25
This is not an error. The payroll system is behaving correctly. The deduction is based on your actual gross pay in that month.
11. Having Both an Undergraduate and Postgraduate Loan
If you have both an undergraduate loan (any plan) and a Postgraduate Loan (Plan 3), both deductions are calculated and taken at the same time. They are assessed independently against their own thresholds — the undergraduate deduction does not reduce the postgraduate deduction or vice versa.
At a £35,000 salary with Plan 2 + Postgraduate Loan:
- Plan 2 deduction: (£35,000 − £29,385) × 9% ÷ 12 = £42.11/month
- Postgraduate deduction: (£35,000 − £21,000) × 6% ÷ 12 = £70.00/month
- Total combined: £112.11/month — nearly £1,346 per year
At the same salary with Plan 5 + Postgraduate Loan:
- Plan 5 deduction: (£35,000 − £25,000) × 9% ÷ 12 = £75.00/month
- Postgraduate deduction: £70.00/month (same calculation)
- Total combined: £145.00/month — £1,740 per year
📌 What appears on your payslip with two loans
Your payslip will show two separate student loan deduction lines — one for your undergraduate plan and one for the postgraduate loan. The total can be significant at modest salary levels, which is why it is important to build this into your monthly budget. The budget planner can help you plan around both deductions.
12. Salary Examples: £25,000 to £50,000
The tables below show the approximate monthly student loan deduction for each plan at common salary levels. These are calculated from confirmed 2026/27 thresholds. Use the take-home pay calculator to see how these deductions interact with your Income Tax and NI for a complete monthly net pay estimate.
| Gross Salary | Plan 1 | Plan 2 | Plan 4 (Scotland) | Plan 5 | Postgraduate |
|---|---|---|---|---|---|
| £25,000 | £0 | £0 | £0 | £0 | £20.00 |
| £30,000 | £23.25 | £4.61 | £0 | £37.50 | £45.00 |
| £35,000 | £60.75 | £42.11 | £9.04 | £75.00 | £70.00 |
| £40,000 | £98.25 | £79.61 | £46.54 | £112.50 | £95.00 |
| £50,000 | £173.25 | £154.61 | £121.54 | £187.50 | £145.00 |
All figures are monthly approximations based on confirmed 2026/27 HMRC thresholds. For a personalised estimate of your full take-home pay including Income Tax, NI, pension and student loan, use the take-home pay calculator.
£25,000 salary
At £25,000 you are below the Plan 1 (£26,900), Plan 2 (£29,385) and Plan 4 (£33,795) thresholds — so no deduction applies to those plans. Plan 5 borrowers sit exactly at their £25,000 threshold, meaning monthly deductions are effectively zero. The only deduction at this salary is for Postgraduate Loan holders: 6% of £4,000 above the £21,000 threshold = £20/month. For a full picture of take-home at this salary, see what a standard calculation shows.
£30,000 salary
This is where the Plan 2 vs Plan 5 difference is most striking. A Plan 2 borrower at £30,000 pays only £4.61/month because they are just £615 above the £29,385 threshold. A Plan 5 borrower on the same salary pays £37.50/month. For a full breakdown of £30,000 take-home, see the £30,000 take-home pay page.
£35,000 salary
At £35,000 the gap between plans is still significant. Plan 1 = £60.75/month, Plan 2 = £42.11/month, Plan 5 = £75/month. Plan 4 borrowers in Scotland start paying at this salary, but only £9.04/month because they are close to their higher £33,795 threshold. A Plan 2 + Postgraduate Loan borrower pays a combined £112.11/month.
£40,000 salary
At £40,000 all plans produce a meaningful deduction. Plan 2 = ~£80/month, Plan 5 = £112.50/month, Plan 1 = ~£98/month. Adding a Postgraduate Loan to Plan 2 produces a combined £174.61/month. For a full breakdown, see the £40,000 take-home pay page.
£50,000 salary
At £50,000 Plan 5 borrowers pay the most: £187.50/month. Plan 2 = £154.61/month. Combined Plan 2 + Postgraduate = £299.61/month (nearly £3,600/year). A Plan 5 + Postgraduate combination totals £332.50/month — over £3,990/year just in student loan repayments. See the £50,000 take-home pay page for the full deductions breakdown.
| Gross Salary | Plan 2 + Postgraduate | Plan 5 + Postgraduate |
|---|---|---|
| £25,000 | £20.00/mo (PG only) | £20.00/mo (PG only) |
| £30,000 | £49.61/mo | £82.50/mo |
| £35,000 | £112.11/mo | £145.00/mo |
| £40,000 | £174.61/mo | £207.50/mo |
| £50,000 | £299.61/mo | £332.50/mo |
13. Why Was Student Loan Taken Even When I'm Near the Threshold?
This is one of the most common questions from employees who think their salary is below the repayment threshold. The answer is usually one of these three things:
1. Your monthly gross crossed the monthly threshold
The repayment threshold is checked monthly, not annually. The monthly equivalent of the Plan 2 threshold (£29,385) is £2,448.75. If your monthly gross exceeded this — even by a few pounds due to a small bonus or overtime — a deduction is taken. This is correct behaviour, not an error.
2. Your salary crept above the annual threshold
If you recently received a pay rise that took you above the threshold, deductions start automatically once HMRC updates your employer. You do not receive a separate notification.
3. Wrong plan type being applied
Less commonly, your employer may have set up the wrong loan plan type in payroll. Since Plan 5 has the lowest threshold (£25,000), being incorrectly recorded as Plan 5 when you are actually Plan 2 could trigger deductions at a salary where none should occur. Check your payslip and compare to your Student Loans Company account. Contact your payroll department if there is a mismatch.
14. Common Mistakes When Estimating Deductions
A few mistakes come up again and again when employees try to work out what their student loan deduction should be:
- Calculating 9% of total salary — the repayment is 9% of the income above the threshold, not 9% of your full gross pay. At £35,000 on Plan 2, that is 9% of £5,615, not 9% of £35,000.
- Not knowing their plan type — using the wrong threshold can give completely different estimates. The difference between Plan 2 and Plan 5 at £30,000 is over £32/month. Always confirm your plan via your SLC account.
- Forgetting the Postgraduate Loan — if you have a Master's or Doctoral Loan, it is deducted separately and on top of your undergraduate deduction. Many graduates underestimate their combined monthly deduction.
- Expecting deductions to stop when income drops below the threshold — they do stop automatically in each month where gross pay is below the threshold, but interest on the loan balance continues to accumulate regardless.
- Treating the annual threshold as a cliff edge — some employees assume that earning one pound above the threshold means they owe 9% of everything. You only pay 9% of the amount above the threshold. Crossing the threshold by £100 at Plan 2 costs just £9 in annual repayments.
15. How Student Loans Affect Your Take-Home Pay
Student loan deductions reduce your take-home pay on top of — not instead of — Income Tax and National Insurance. They are calculated on gross pay but sit alongside PAYE deductions in terms of their impact on your monthly bank balance.
To put it in context: at £35,000 in England with a standard 1257L tax code, Income Tax and NI alone reduce monthly pay by around £585. Add a Plan 2 student loan and you lose another £42. Add a Postgraduate Loan and it is another £70. Combined deductions from all three sources: approximately £697/month from a £2,917 monthly gross.
🔎 What does a "real payslip" look like?
For a £35,000 gross salary on Plan 2 with Postgraduate Loan, your payslip
deductions would typically show:
Gross pay: £2,916.67
Income Tax: −£373.83
National Insurance: −£211.37
Student Loan (Plan 2): −£42.11
Postgraduate Loan: −£70.00
Net pay: approximately £2,219/month
That is £2,219 in your bank from a £2,917 gross — a combined deduction
rate of just over 24%. Without the student loans it would be around £2,331.
For an accurate figure based on your own salary, pension contribution, tax code and loan plan, use the take-home pay calculator. If you are wondering what counts as a good salary once all deductions are accounted for, the what is a good salary UK guide breaks this down with real context.
16. Check Your Take-Home Pay with Our Calculator
The fastest way to see exactly how student loan deductions affect your monthly pay is to run your salary through the calculator. It covers Income Tax, National Insurance, pension auto-enrolment and student loan deductions — all in one calculation.
- Take-Home Pay Calculator — supports all student loan plan types; enter your gross salary, plan and any pension contribution for a full deductions breakdown.
- Salary to Hourly Calculator — convert your annual salary to an hourly rate to double-check contract terms.
- Monthly to Hourly Calculator — work out your effective hourly rate from your monthly gross.
- Budget Planner — once you know your real take-home, plan your monthly spending around it. Especially useful if you have just started seeing student loan deductions for the first time.
💡 Tip: estimate the before-and-after difference
Run your salary twice in the calculator — once with student loan selected, once without. The difference is your monthly student loan deduction. This helps you see exactly how much the loan is reducing your take-home versus Income Tax and NI, and whether adjusting your pension contribution could partially offset the impact.
17. Frequently Asked Questions
How much student loan is deducted from my salary each month?
It depends on your plan and how much you earn above the threshold. On Plan 2 at £35,000, you pay approximately £42/month. On Plan 5 at the same salary it is £75/month. On a combined undergraduate and postgraduate loan at £35,000 it can be over £112/month. Use the take-home pay calculator for your exact figure.
What are the 2026/27 student loan thresholds?
The confirmed annual thresholds are: Plan 1: £26,900 | Plan 2: £29,385 | Plan 4 (Scotland): £33,795 | Plan 5: £25,000 | Postgraduate: £21,000. Repayment is 9% above the threshold for Plans 1, 2, 4 and 5, and 6% above the threshold for the Postgraduate Loan.
Why was student loan deducted when I'm close to the threshold?
Deductions are calculated on your gross pay in each individual pay period. If your monthly gross exceeds the monthly threshold — even because of a small bonus or overtime — a deduction is taken in that month. The monthly Plan 2 threshold is £2,448.75. Earning £2,500 in a month triggers a deduction of just £4.61, but a deduction nonetheless. This is correct payroll behaviour.
What is the difference between Plan 2 and Plan 5?
Plan 2 applies to English/Welsh students who started September 2012–July 2023. Plan 5 applies from August 2023 onwards. Plan 5 has a lower threshold (£25,000 vs £29,385), meaning deductions start earlier. However, Plan 5 carries lower interest (RPI only vs RPI + up to 3% for Plan 2) and a longer 40-year write-off. At £30,000, the monthly difference is around £33 in favour of Plan 2 borrowers.
I have a postgraduate loan on top of my student loan. How does that work?
Both deductions are taken simultaneously but calculated separately. Your undergraduate loan (Plan 1, 2, 4 or 5) is calculated at 9% above its threshold; your Postgraduate Loan at 6% above £21,000. At £35,000 the combined deduction for Plan 2 + Postgraduate is approximately £112/month. Both appear as separate lines on your payslip.
Does a bonus increase my student loan repayment?
Yes. Student loan deductions are calculated on your total gross pay in the month the bonus is paid. A large bonus can push a month's gross well above the monthly threshold, producing a significant one-off deduction even if your regular salary produces no deduction. This is correct and expected — not an error — and is not refunded after the bonus month.
How do I know which student loan plan I am on?
Check your payslip once deductions begin — it will show the plan type. You can also log into your Student Loans Company account at slc.co.uk. As a guide: Plan 1 = England/Wales before September 2012 or any Northern Ireland borrower. Plan 2 = England/Wales September 2012–July 2023. Plan 4 = Scotland. Plan 5 = England from August 2023. Postgraduate = Master's or Doctoral Loan, England/Wales.
Is student loan deducted on gross or net pay?
Student loan repayments are calculated on your gross pay — before Income Tax and National Insurance are applied. This means the deduction comes out of your pre-tax earnings, alongside (not as a substitute for) your tax and NI. You cannot offset student loan repayments against tax.
When will my student loan be written off?
Write-off periods from the April following graduation: Plan 1 after 25 years (or age 65, whichever is sooner), Plans 2 and 4 after 30 years, Postgraduate after 30 years, Plan 5 after 40 years. Any remaining balance is cancelled and does not affect your credit score. The majority of Plan 2 borrowers are not expected to repay in full before write-off.
Why does my student loan deduction change each month?
Unlike Income Tax (which is cumulative), student loan deductions are calculated independently each month. If your pay varies — due to variable hours, overtime, commission or bonuses — your deduction varies accordingly. In any month where your gross pay falls below the monthly threshold, the deduction is zero.
Can my employer change my student loan plan type?
No. Your employer applies the plan type instructed by HMRC. Only the Student Loans Company or HMRC can issue a change. If your payslip shows the wrong plan type, contact your payroll department and ask them to check the SL1 or SL2 start notice they received from HMRC. If the HMRC record is wrong, contact HMRC directly. Overpaid deductions due to a wrong plan type can be reclaimed.
18. Summary
UK student loan repayments are based on your income above a threshold — not on what you borrowed. In 2026/27 the confirmed thresholds are: Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000, and Postgraduate Loan £21,000. Undergraduate loans are repaid at 9% above the threshold; postgraduate at 6%.
Deductions are calculated monthly on your gross pay and change if your earnings change. Bonuses and overtime can trigger one-off deductions even if your regular salary sits below the threshold. If you have both an undergraduate and postgraduate loan, both are deducted simultaneously.
The Plan 2 vs Plan 5 difference is significant at lower salaries: at £30,000, Plan 2 borrowers pay around £5/month while Plan 5 borrowers pay around £38/month. As salary increases, the gap narrows but does not disappear.
For a complete monthly take-home calculation that includes Income Tax, NI, pension and your student loan plan, use the take-home pay calculator. Once you know your real net pay, the budget planner can help you manage your finances around it.
This article is for general information only. Student loan thresholds are confirmed by HMRC and correct as at April 2026. Always verify your plan type and current threshold via the Student Loans Company or GOV.UK. This is not financial advice.