Should I pay off my student loan? Repayments and write-off by plan

How much do you repay on a UK student loan?

You repay 9% of your income above your plan's repayment threshold, or 6% above £21,000 on a Postgraduate Loan, and the amount you owe makes no difference to the monthly payment. According to GOV.UK, income means what you earn before tax and other deductions, including bonuses and overtime. Your employer takes the money through payroll, using monthly or weekly thresholds, and rounds the result down to whole pounds.

The table below applies those rules to steady monthly pay. On £40,000 a year on Plan 2, for example, monthly pay is £3,333.33; the amount over £2,448 is £885.33, and 9% of that is £79.68, so £79 comes off your pay each month.

Payroll repayments are worked out job by job, so two jobs each under the threshold take nothing. Self-employed income is assessed on the whole year through Self Assessment. If your income for the full tax year ends up below the yearly threshold, you can ask for a refund, so keep your payslips and your P60.

Which repayment plan are you on?

Your repayment plan depends on where you applied for student finance and when your course started, and you cannot choose it. According to GOV.UK, the plans are set like this:

• Plan 1: England or Wales courses that started before 1 September 2012, and all Student Finance Northern Ireland loans, undergraduate or postgraduate.
• Plan 2: England or Wales undergraduate courses (and PGCEs) that started from 1 September 2012 to 31 July 2023.
• Plan 4: all Student Awards Agency Scotland loans, undergraduate or postgraduate.
• Plan 5: England undergraduate courses (and PGCEs) that started on or after 1 August 2023. The first Plan 5 repayments were due in April 2026.
• Postgraduate Loan: England or Wales Master's and Doctoral Loans.

If you are not sure, sign in to your online account and download your active plan type letter. If payroll has you on the wrong plan, show the letter to your employer; GOV.UK says you can get a refund of anything overpaid.

What happens if you have two student loan plans?

With two undergraduate plans you make one repayment of 9% over the lower threshold, and a Postgraduate Loan adds a separate 6% on top. According to GOV.UK, someone on Plan 1 and Plan 2 earning £38,400 a year (£3,200 a month) repays 9% of £959, which is £86 a month, because £2,241 is the lowest threshold.

That £86 is then split. The plan with the lower threshold can take at most 9% of the gap between the two monthly thresholds: £2,448 less £2,241 is £207, and 9% of £207 is £18.63, so £18 goes to Plan 1 and £68 to Plan 2. When Plan 1 is paid off, your repayment drops to 9% over the Plan 2 threshold.

A Postgraduate Loan works differently. GOV.UK's example has a Plan 2 borrower with a Postgraduate Loan on £30,000 a year (£2,500 a month): 6% of £750 over £1,750 is £45, plus 9% of £52 over £2,448 is £4.68, so £49 a month in total. On £40,000 the two together come to £174 a month, which is 15% of your pay above £2,448 a month plus 6% of the slice between £1,750 and £2,448.

How is student loan interest worked out in 2026/27?

Student loan interest is linked to the Retail Price Index (RPI), a measure of inflation, from the previous March, and it is added to your balance every month whether or not you are repaying. From 1 September 2026 the rates are:

Plan 2 interest slides with income. According to GOV.UK's Plan 2 interest guidance, you pay RPI only at £29,385 or less and RPI + 3% at £52,885 or more. In between, the extra is 3% multiplied by how far your income sits between the two: on £40,000 that is £10,615 divided by £23,500, times 3, which is 1.35%, so 5.46% in total. At £45,000 the formula gives 6.09%, but a 6% cap applies from 1 September 2026 to 31 August 2027. The government announced the cap on 7 April 2026.

While you are studying, Plan 2 interest is RPI + 3% (capped at 6% this year) until the April after you finish.

When is your student loan written off?

Your student loan is written off a fixed number of years after the April you were first due to repay, whatever is left, and you never have to repay the written-off amount. According to GOV.UK:

The first April you are due to repay is normally the April after you leave your course. A Plan 2 graduate who finished in summer 2021 was first due to repay in April 2022, so any balance left is cancelled in April 2052. SLC also cancels a loan if the borrower dies, and may cancel it if you cannot work because of illness or disability and get certain benefits.

Should you pay off your student loan early?

Paying off your student loan early saves money only if you would otherwise repay it in full before it is written off; if you would not, every extra pound simply adds to what you pay. According to GOV.UK, there is no penalty for extra repayments, but you cannot get them refunded, and you "might not benefit" because your loan will be written off at the end of the term.

The answer turns on your future earnings, not your balance. Three things push towards overpaying: a high salary that will rise, a balance small enough to clear well before the write-off date, and a high interest rate. Three push against: a modest or uncertain income, a Plan 5 loan with a 40-year term and a low threshold, and better uses for the money, such as an emergency fund, a pension with employer contributions or a mortgage deposit. Student loans do not appear on your credit report, though GOV.UK says lenders may consider them in affordability checks.

Run your own figures in our student loan repayment calculator. It projects your balance month by month to the clear or write-off date and shows the total you would repay with and without a one-off or monthly overpayment.

Worked examples: a £45,000 Plan 2 loan at four salaries

A Plan 2 graduate with £45,000 owed is likely to clear it only on a salary of around £60,000 or more, on our assumptions. The figures below come from the engine behind our calculator, with the balance on 4 October 2026, first due to repay in April 2022 (written off in April 2052), pay rising 3% a year, RPI of 3% from September 2027, and Plan 1, 4 and 5 thresholds rising 3% a year. The Plan 2 threshold stays at £29,385 until April 2030 and then rises 3% a year. These are projections from assumptions, not forecasts.

The middle earners repay the most. At £60,000 you repay £83,500 because the balance grows at up to 6% for years before it is cleared, while at £80,000 you clear it sooner and pay less interest. At £30,000 and £45,000 the loan is written off, so a £10,000 lump sum is £10,000 you never get back.

Small changes to the assumptions move the line. With pay rising 2% a year instead of 3%, the £60,000 earner no longer clears the loan by April 2052 and repays £86,538, though the £10,000 lump sum would then save £18,188 by getting them to the finish line. Test your own figures rather than relying on a rule of thumb.

Worked example: Plan 2 and a Postgraduate Loan on £40,000

With £50,000 on Plan 2 (first due April 2022) and £13,000 on a Postgraduate Loan (first due April 2023), £174 a month comes off a £40,000 salary: £79 to Plan 2 and £95 to the Postgraduate Loan. On the same assumptions the Postgraduate Loan is cleared in June 2038 after £18,812 of repayments, and the Plan 2 loan is written off in April 2052 after £44,406. Here an overpayment aimed at the Postgraduate Loan only speeds up a loan you would clear anyway, while the Plan 2 balance is still written off.

What the Plan 2 threshold freeze means for you

The Plan 2 threshold freeze means you repay more each year from April 2027 than you would if the threshold kept rising. According to the Budget 2025 document published on 26 November 2025, "the repayment threshold for Plan 2 student loans will be frozen at £29,385 for three years from April 2027", covering the 2027/28, 2028/29 and 2029/30 tax years.

The cost is 9% of the rise the threshold would otherwise have had. If it had risen by 3% in April 2027, to about £30,267, a Plan 2 borrower above the threshold would have repaid about £79 a year less. Over three years the gap grows as the frozen threshold falls further behind. For people who will never clear their loan, this is simply more paid before write-off. For those who will clear it, it brings the clear date forward and cuts the interest.

Common student loan repayment mistakes

• Being on the wrong plan in payroll. Check your payslip against your active plan type letter. A Plan 2 borrower deducted on Plan 1 pays about £18 to £19 a month too much once pay is over £29,385.
• Overpaying a loan that will be written off. Extra repayments cannot be refunded. Work out whether you would clear the loan first.
• Judging by the balance. Your monthly repayment depends only on income. A bigger balance changes how long you pay, not how much each month.
• Forgetting the second plan. A Postgraduate Loan adds 6% on top of the 9%, so your marginal deductions on pay above the threshold can reach 15% plus Income Tax and National Insurance (see marginal tax rate).
• Ignoring salary sacrifice. According to HMRC's Collection of Student Loans Manual, pay liable to Class 1 National Insurance is also liable to student loan repayments, so salary sacrifice into a pension lowers your student loan deduction as well. Our UK salary take-home calculator shows the effect.
• Not claiming a refund. If a bonus pushed one month over the threshold but your yearly income stayed below it, you can ask for the money back.