Student loan repayments through payroll
Student loans behave more like a graduate tax than a debt: you repay a slice of income above a threshold, and the balance is eventually written off.
Plan 1
£26,900
Plan 2
£29,385
Plan 5 (new)
£25,000
Postgrad
£21,000
Which plan are you on?
- Plan 1 – England/Wales loans before 2012, and most Northern Ireland loans. Threshold £26,900.
- Plan 2 – England/Wales undergraduates from 2012 to July 2023. Threshold £29,385, now frozen for three years from April 2027.
- Plan 4 – Scottish loans. Threshold £33,795.
- Plan 5 – English students starting from August 2023; the first repayments ever taken began in April 2026. Threshold £25,000, written off after 40 years.
- Postgraduate Loan – masters and doctoral loans. Threshold £21,000 at 6 percent, charged on top of any undergraduate plan.
All undergraduate plans charge 9 percent of income above the threshold. Someone on £35,000 with Plan 2 repays 9 percent of £5,615 – about £42.11 a month.
How payroll takes it
HMRC tells your employer to start deductions via a start notice; your employer never knows your balance, only the plan type. Deductions are worked out per pay period, so a bonus month can trigger a deduction even if your annual income sits below the threshold. If you are on the wrong plan – common after switching jobs – you could be overpaying significantly. Your payslip shows the plan; your SLC online account confirms the right one.
Have both an undergraduate plan and a postgraduate loan? You repay both at once: 15 percent of income above both thresholds. The student loan calculator handles combined deductions.
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