Written and reviewed by James Whitfield · Updated for 2026/27 · Editorial standards · Methodology
There are five student loan repayment plans in the UK, each with different thresholds and repayment terms. Getting the wrong plan in a salary calculator can overstate or understate your take-home by £100+ per month.
Typical default take-home figures for fast context before reading.
The UK has five main student loan repayment plans: Plan 1, Plan 2, Plan 4, Plan 5 and the Postgraduate Loan. Each applies to different cohorts of borrowers, has a different repayment threshold, and in the case of Plan 5, a different repayment term. Getting your plan type wrong in a calculator, or in HMRC's records, can produce materially different estimated take-home pay.
All plans charge repayments as a percentage of income above the threshold, not as a fixed monthly amount. This means repayments increase as income rises but stop entirely when income falls below the threshold. Unlike a mortgage or credit card, there is no minimum payment, if you earn below the threshold, you owe nothing that month.
Repayments are deducted through payroll as part of PAYE, alongside income tax and NI. Your employer does not know which plan you are on, HMRC tells them via the tax code system. If HMRC has the wrong plan on file (a reasonably common error for people who started repaying in the first few years after the plan change in 2012), your payslip may show the wrong deduction.
Plan 2 applies to students who started undergraduate courses on or after 1 September 2012 in England or Wales. It is currently the most common plan among working-age employees with student loans in England. For 2026/27, the repayment threshold is £27,295, meaning you repay 9% of earnings above this amount.
At a salary of £35,000, your Plan 2 repayment is 9% of (£35,000 minus £27,295) = 9% of £7,705 = £693 per year, or approximately £57.75 per month. At £50,000, the repayment rises to 9% of (£50,000 minus £27,295) = 9% of £22,705 = £2,043 per year, or approximately £170 per month.
Plan 2 loans are written off after 30 years from the April following graduation. With the interest rate structure, many borrowers, particularly those on lower or average salaries, will never clear the loan principal before write-off. This has implications for how much you should prioritise overpayments versus other financial priorities, though that is a personal finance question outside the scope of payroll estimation.
Plan 1 applies to students who started before 1 September 2012 in England or Wales, or students from Scotland and EU countries who studied in the UK before certain dates. The repayment threshold for 2026/27 is £24,990, lower than Plan 2.
At a salary of £35,000, the Plan 1 repayment is 9% of (£35,000 minus £24,990) = 9% of £10,010 = £901 per year, or approximately £75 per month, notably higher than the Plan 2 equivalent at the same salary. At £50,000, the difference is more significant: Plan 1 produces approximately £227/month vs Plan 2's £170/month.
Plan 1 loans are written off at age 65 (for those who took them out from 1990 to 2005) or 25 years from the April after first repayment (for later borrowers). Unlike Plan 2, the interest on Plan 1 loans is linked to RPI, which has sometimes resulted in relatively low real interest rates.
Plan 4 applies to Scottish graduates who studied at Scottish institutions. The threshold is higher than both Plan 1 and Plan 2, for 2026/27 it stands at £31,395. This means Scottish graduates begin repaying later as income rises, and at £35,000, a Plan 4 borrower repays only 9% of (£35,000 minus £31,395) = 9% of £3,605 = £324 per year, or approximately £27 per month.
The higher Plan 4 threshold effectively reduces the student loan burden for Scottish graduates at the same salary level. Combined with Scotland's generally different approach to higher education funding (tuition fees are different in Scotland), this makes loan repayment behaviour and net pay quite different for Scottish graduates compared with English counterparts on the same salary.
Plan 4 loans are written off 30 years from the April following graduation or at age 65, whichever comes first. The interest rate is tied to RPI, similar to Plan 1.
Plan 5 applies to students who started undergraduate courses on or after 1 August 2023 in England. It was introduced as part of the government's response to the Augar Review and represents a significant change in borrower terms. The repayment threshold for 2026/27 is £25,000, lower than Plan 2's £27,295, and the repayment term is 40 years (compared with Plan 2's 30 years).
The combination of a lower threshold and a longer repayment term means Plan 5 borrowers will repay more over their working lives. At a £35,000 salary, monthly repayment on Plan 5 is approximately 9% of (£35,000 minus £25,000) = 9% of £10,000 = £900/year or £75/month, the same as Plan 1 and substantially more than Plan 2.
For new students who began in 2023 or later and are estimating take-home pay, selecting Plan 5 in the calculator is essential. Using Plan 2 settings would underestimate monthly deductions by approximately £17/month at a £35,000 salary, a meaningful error for budgeting purposes.
Postgraduate loans are separate from undergraduate plans and have their own repayment structure. For 2026/27, repayments are 6% of earnings above £21,000. If you have both an undergraduate loan and a postgraduate loan, both are deducted simultaneously, they do not merge into a single repayment.
On a salary of £35,000, postgraduate repayment is 6% of (£35,000 minus £21,000) = 6% of £14,000 = £840/year or £70/month. If you also have a Plan 2 undergraduate loan, total loan deductions are approximately £58 + £70 = £128/month at this salary. At £50,000, the combined total can exceed £300/month.
Calculator tools need to handle these two loan types separately. If you have a postgraduate loan, enter it alongside your main plan to get an accurate take-home estimate. Postgraduate loan repayments are made at 6% regardless of which undergraduate plan you are on, the rate does not change based on undergraduate plan type.
Use these current tax-year figures as context while reading this article.
| Band | Gross salary range | Rate |
|---|---|---|
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
| Band | Gross salary range | Rate |
|---|---|---|
| Starter rate | £12,571 to £16,537 | 19% |
| Basic rate | £16,538 to £29,526 | 20% |
| Intermediate rate | £29,527 to £43,662 | 21% |
| Higher rate | £43,663 to £75,000 | 42% |
| Advanced rate | £75,001 to £125,140 | 45% |
| Top rate | Over £125,140 | 48% |
| Plan | Threshold | Rate |
|---|---|---|
| PLAN1 | £26,900 | 9% |
| PLAN2 | £29,385 | 9% |
| PLAN4 | £33,795 | 9% |
| PLAN5 | £25,000 | 9% |
| Postgraduate | £21,000 | 6% |
Yes. The examples align to current 2026/27 assumptions used by the calculator, including PAYE income tax and UK NI treatment.
Differences usually come from tax-code changes, bonus timing, benefits, multiple employments or period-level payroll adjustments.
No. Compare both monthly and annual net pay because loan plan, pension and tax-region settings can materially change outcomes.
Yes. Correct student loan plan and pension percentage are two of the biggest drivers of realistic net-pay estimates.
No. This content is informational and planning-focused, not personal financial advice.
Use official HMRC and UK government guidance for tax, NI, student loan and Scottish income tax rules.