UK Student Loan Repayment Calculator

About UK Student Loan Repayment Calculator

2026/27 Repayment Rates and Thresholds

For the 2026/27 tax year, thresholds rose on all pre-2023 plans but Plan 5 stayed frozen at £25,000 and Postgraduate at £21,000. The Plan 2 threshold rises to £29,385 from 6 April 2026 and will then be frozen at that level for three further years from April 2027 (DfE confirmation, April 2026). Plan 5 remains at £25,000 until April 2027, when it is intended to start uprating annually in line with RPI.

You only repay a percentage of income above the threshold. If you earn less than the threshold at any point, repayments pause until your earnings rise again. Thresholds above are from gov.uk "Student loans: a guide to terms and conditions 2026 to 2027" and take effect 6 April 2026.

How Repayments Are Calculated

Monthly repayment is the amount your gross monthly pay exceeds the monthly threshold, multiplied by the plan rate. HMRC collects it alongside income tax through PAYE.

Monthly Repayment = (Gross Monthly Salary - Monthly Threshold) x Rate

Worked example (Plan 2, £35,000 salary):

• Annual income above threshold: £35,000 - £29,385 = £5,615
• Annual repayment: £5,615 x 9% = £505.35
• Monthly: £505.35 / 12 = £42.11

Worked example (Plan 2 + Postgraduate, £45,000 salary):

• Plan 2: (£45,000 - £29,385) x 9% = £1,405.35/year (£117.11/month)
• Postgraduate: (£45,000 - £21,000) x 6% = £1,440.00/year (£120.00/month)
• Combined: £237.11/month

HMRC actually assesses each payslip individually using the monthly threshold (£2,448.75 for Plan 2), so a one-off bonus can push that month into repayments even if your annual salary is below the threshold. Year-end reconciliation is only available by contacting the Student Loans Company directly.

Quick Repayment Reference (Plan 2, 2026/27)

At any salary, the repayment never exceeds 9% because only the portion above the threshold is charged. A £60,000 earner pays less than 5% of gross income towards Plan 2 even though the headline rate is 9%.

Should You Overpay Your Student Loan?

For most Plan 2 and Plan 5 borrowers, overpaying is a bad idea because the balance will be written off before it is cleared. The Institute for Fiscal Studies forecast that only around 20-25% of Plan 2 graduates will fully repay before the 30-year cancellation. Plan 5 is different: the Department for Education forecasts that a majority of Plan 5 students (around 56-65% across forecast vintages) WILL repay in full within the 40-year term, thanks to the lower £25,000 threshold and longer repayment window - but most of those who repay do so only near the very end of the term.

• If your balance will be written off anyway, overpaying is giving money to HM Treasury. You would have paid the same total through PAYE regardless of the outstanding balance.
• Overpay only if you have high certainty you will repay in full. That usually means a graduate salary above £50,000 rising steadily, a low starting balance, and no plans to take a career break.
• Compare the loan interest rate to investment returns. With Plan 2 interest at RPI to RPI+3% (3.2% to 6.2% as of September 2025), a low-fee Stocks and ISA tracker has historically returned more than the student loan interest, making investing the better use of surplus cash for most people.

Plan 1 is different. The lower starting balance and the RPI-or-Bank-Rate-plus-1 interest cap mean most Plan 1 borrowers on a normal graduate trajectory do clear their balance, so targeted overpayments can make sense. A quick check with the debt payoff calculator shows how extra monthly overpayments shorten the payoff date.

Student Loan Interest Rates

Interest rates are set each September and linked to RPI inflation. For the 12 months from 1 September 2025 to 31 August 2026, the applicable RPI is 3.2% (March 2025 figure from the ONS), which the government uses as the reference RPI under the Teaching and Higher Education Act 1998.

A "prevailing market rate" cap also applies: Plan 2, 4, and 5 rates can never exceed the average advertised rate on commercial unsecured personal loans, published monthly by the Department for Education. In high-inflation years (like 2023) the cap bound rates below the RPI+3% formula; for September 2025 to August 2026 the formula maximum of 6.2% (RPI 3.2% + 3%) sits below the cap, so the full formula rate applies.

Update (April 2026): On 13 April 2026 the government announced that Plan 2 and Plan 3 (postgraduate) interest rates will be capped at 6% from 1 September 2026 for the 2026/27 academic year (gov.uk Student Loans interest rate and repayment threshold announcement). This pulls the Plan 2 maximum slightly below the prevailing market rate calculation and brings the Postgraduate rate down from 6.2% to 6%.

Student Loans, Mortgages, and Take-Home Pay

Student loan repayments do not appear on your credit report and do not affect your credit score. However, UK mortgage lenders do factor them into affordability assessments because they reduce net monthly income. A £45,000 Plan 2 earner pays £117 per month to the loan, so a lender treats it the same as a £117 recurring commitment when calculating borrowing capacity - that can shave tens of thousands off the maximum mortgage offer.

To see how student loan deductions stack up against income tax and National Insurance, the UK income tax calculator includes a student loan option so you can model full take-home pay. For a clean salary-to-monthly-pay conversion including pensions, use the salary calculator.

How Plans Differ in Practice

The five plans look similar on the surface - a threshold and a percentage - but they behave very differently over a 30 or 40-year career because of write-off rules and interest structures.

• Plan 1 (pre-2012 England/Wales, Northern Ireland): The oldest and most generous plan. Balances are capped lower (most graduates had tuition at £3,000-£3,375 per year), interest is the lower of RPI or Bank Rate + 1%, and write-off comes at age 65 or 25 years from the April after graduation. Most Plan 1 borrowers will repay in full.
• Plan 2 (Sep 2012 - Jul 2023 England/Wales): Tuition tripled to £9,000 then £9,250 a year under this plan, so typical balances sit around £45,000-£60,000. Interest tiers from RPI to RPI+3% based on salary. Write-off after 30 years, which is why IFS modelling shows only around 25% repaying in full.
• Plan 4 (Scotland): Similar mechanics to Plan 1 but with a higher threshold (£33,795) because Scottish students typically take smaller loans thanks to free tuition for Scottish-domiciled undergraduates. Scottish-domiciled students studying in Scotland do not pay tuition, so loans are usually for living costs only.
• Plan 5 (Aug 2023 onward England): The "lifetime repayment" plan. Write-off pushed from 30 to 40 years, threshold frozen at £25,000 until April 2027, and interest capped at RPI (no uplift). The lower interest is cold comfort - the longer repayment window means nearly two-thirds of graduates are projected to pay more in total than under Plan 2.
• Postgraduate (Master's or PhD loan): Runs alongside any undergraduate plan at a separate 6% rate above £21,000. Thirty-year write-off. The threshold is not linked to RPI but is reviewed annually by the government.

Common Mistakes and Edge Cases

• Self-assessment tax returns: If you are self-employed, student loan repayments are calculated on total taxable income including dividends and rental income, not just PAYE salary. HMRC bills this through your Self Assessment.
• Bonuses push you over the monthly threshold: A December bonus is taxed against the monthly Plan 2 threshold of £2,448.75 even if your usual salary is below the annual threshold. You can request a refund from SLC at year end if your annual income was below the threshold.
• Leaving the UK: Overseas residents must still repay, but thresholds are adjusted for the country's cost of living using the SLC's overseas earnings bands (gov.uk publishes the current list annually).
• Settlement letters arrive too late: If you are close to full repayment, switch to direct debit in the last two years to avoid overpaying by a month or two through PAYE after the balance has cleared.
• Voluntary repayments do not reduce monthly PAYE: A £5,000 voluntary payment will not stop deductions from your next payslip; PAYE continues until SLC formally closes the loan.

Sources

• GOV.UK - Student loans terms and conditions 2026/27
• GOV.UK - Repaying your student loan: What you pay
• House of Commons Library - Student loans interest rates FAQs
• Institute for Fiscal Studies - Student loan reforms and repayment projections
• GOV.UK - How Plan 2 interest is calculated
• ONS - RPI inflation data
• GOV.UK - Student Loans Interest Rates and Repayment Threshold Announcement 2026/27

Thresholds and rates are from the Student Loans Company and gov.uk as of April 2026. All calculations run in your browser - no data is sent to any server.