UK Student Loan Plans: How Much Are You Really Paying?
Quick answer
Undergraduate plans normally deduct 9% of earnings above the applicable plan threshold. A postgraduate loan adds 6% above its own threshold. Check your plan with the official service; payroll applies pay-period thresholds.
Last reviewed for the 2026/27 tax year using the sources listed below.
Updated all repayment thresholds for 2026/27 and clarified that deductions are made by pay period.
UK student-loan payroll deductions depend on your repayment plan and income above its threshold. They do not operate like fixed repayments on a conventional bank loan, and any remaining balance is written off after the period specified for that plan. This guide explains how the main plans affect an annual take-home-pay estimate.
The Five Student Loan Plans Explained
Your repayment threshold—the amount you must earn before you start paying anything back—depends on your plan. These are the payroll thresholds from 6 April 2026:
1. Plan 1 (Pre-2012 Students)
Plan 1 applies to several older English and Welsh loans and to some borrowers from Northern Ireland. The 2026/27 payroll threshold is £26,900 a year (£2,241.66 a month or £517.30 a week). Employers deduct 9% of pay above the applicable pay-period threshold.
2. Plan 2 (Post-2012 Students)
Plan 2 generally covers eligible English or Welsh undergraduate loans taken out from September 2012 and before the Plan 5 transition. The 2026/27 payroll threshold is £29,385 a year (£2,448.75 a month or £565.09 a week), with 9% deducted above the pay-period threshold. Your plan depends on where and when you studied, so check it through the official service rather than relying on a date alone.
3. Plan 4 (Scottish Students)
Plan 4 covers eligible Scottish student loans. The 2026/27 payroll threshold is £33,795 a year (£2,816.25 a month or £649.90 a week), with 9% deducted above the pay-period threshold.
4. Plan 5 (The New Post-2023 Plan)
Plan 5 generally applies to eligible English undergraduate courses starting on or after 1 August 2023. Its 2026/27 payroll threshold is £25,000 a year (£2,083.33 a month or £480.76 a week), with 9% deducted above the pay-period threshold.
5. Postgraduate Loans
If you took out a Master's or Doctoral loan, you face a different structure. The threshold is only £21,000 a year (£1,750 a month). You pay 6% of earnings above this. Crucially, postgraduate loan deductions happen concurrently with undergraduate loans. If you earn £30,000 on Plan 2 with a Master's, you will be paying 9% towards your undergrad AND 6% towards your postgrad simultaneously!
Are You Overpaying?
An incorrect plan can change the deduction taken from your pay. Check your payslip and use the official government service if you are unsure which plan applies. Our UK Salary Calculator provides an annual estimate; payroll uses the monthly or weekly threshold and rounds deductions under HMRC rules. New to the country? Our guide to the UK PAYE system explains how these deductions reach your payslip.
Official sources
This article received an editorial fact-check, not a review by a regulated tax adviser. See our editorial and corrections policy.