Student loans make it possible for thousands of people across the UK to access higher education, but the repayment rules can often feel confusing.
Knowing exactly how much you need to earn before repayments begin, how deductions are calculated, and how different plans work can help you manage your finances with confidence.
This guide explains the current repayment thresholds, how repayments are made under each plan, and what to expect if your circumstances change, whether you have more than one loan, work abroad, or want to make early repayments.
What Determines When You Start Repaying Your Student Loan in the UK?
You don’t start repaying your student loan as soon as you graduate. Instead, repayments begin once your income exceeds a specific threshold, which depends on the loan plan you’re on. These thresholds are reviewed and updated every April by the UK government to account for inflation and economic changes.
For example, if you’re on Plan 2, you won’t repay anything until your annual salary exceeds £28,470. If you’re on Plan 4 (used by Scottish students), the threshold is even higher – £32,745 per year.
The key factors that determine when and how much you repay include:
- Repayment threshold for your plan
- Type of loan (undergraduate or postgraduate)
- Your income before tax, including bonuses, overtime, and commissions
- Employment status, whether under PAYE, self-employed, or overseas
If your income drops below the threshold, repayments stop automatically. This ensures the system remains flexible and responsive to your current financial situation.
How Do Student Loan Repayments Work Under Each Plan?
The plan you’re on depends on where and when you studied, and whether your loan was undergraduate or postgraduate. Each plan has a different threshold, interest rate, and write-off period.
Key Differences Between Plan 1, Plan 2, Plan 4, Plan 5, and Postgraduate Loans:
| Plan Type | Threshold (Annual) | Repayment Rate | Interest (Typical) |
|---|---|---|---|
| Plan 1 | £26,065 | 9% over threshold | 3.2% |
| Plan 2 | £28,470 | 9% over threshold | 3.2–6.2% (income-based) |
| Plan 4 (Scotland) | £32,745 | 9% over threshold | 3.2% |
| Plan 5 | £25,000 | 9% over threshold | 3.2% |
| Postgraduate | £21,000 | 6% over threshold | 6.2% |
The interest rate for Plan 2 loans is income-dependent after you graduate. For incomes over £51,245, the rate rises to 6.2%. You can find the latest figures on the.
Repayment Rates: 9% or 6% Explained
If you’re on Plan 1, 2, 4, or 5, you repay 9% of your income over the threshold.
If you’re on a Postgraduate Loan plan, you repay 6% of your income over the threshold.
When Plans Apply Based on When and Where You Studied?
- Plan 1: For students who started courses before September 2012 in England and Wales, or who borrowed under the older system.
- Plan 2: For those who started courses in England and Wales after September 2012.
- Plan 4: For Scottish students or those with SAAS-administered loans.
- Plan 5: For English students starting courses from August 2023 (first repayments due April 2026).
- Postgraduate Loans: For Master’s and Doctoral loans.
How Much Will You Repay Monthly Based on Your Salary?
Your monthly repayments are calculated as a percentage of your earnings over the threshold. This means someone earning just over the threshold might repay only a few pounds a month, while higher earners will pay more.
Here’s how monthly repayments would look based on your plan and salary:
| Plan Type | Monthly Salary | Threshold | Amount Over Threshold | Monthly Repayment |
|---|---|---|---|---|
| Plan 1 | £2,750 | £2,172 | £578 | £52.02 |
| Plan 2 | £2,500 | £2,372 | £128 | £11.52 |
| Plan 4 | £3,000 | £2,728 | £272 | £24.48 |
If your income fluctuates (e.g., due to overtime), the amount repaid will vary. If you overpay, you can request a refund at the end of the tax year if your total earnings were below the annual threshold.
Let’s take a look at how repayments work in real life:
Example 1 – Sarah on Plan 1:
Sarah works full-time as a marketing executive in Birmingham and earns £2,750 per month before tax. She’s on Plan 1, with a threshold of £2,172/month.
- Income over threshold: £2,750 – £2,172 = £578
- Monthly repayment: 9% of £578 = £52.02
Example 2 – Daniel on Plan 2:
Daniel is a software developer in Manchester earning £2,500/month. He studied after 2012, so he’s on Plan 2 with a threshold of £2,372/month.
- Income over threshold: £2,500 – £2,372 = £128
- Monthly repayment: 9% of £128 = £11.52
Example 3 – Ayesha on Plan 4:
Ayesha is a Scottish nurse earning £3,000/month. She’s on Plan 4, which has a higher threshold of £2,728/month.
- Income over threshold: £3,000 – £2,728 = £272
- Monthly repayment: 9% of £272 = £24.48
These examples show that repayments are based strictly on income above the threshold and are automatically deducted via payroll.
What Happens If You Have More Than One Loan Type?
Many graduates have more than one loan type, for example, a Plan 2 loan alongside a Postgraduate Loan. In this case, you repay:
- 9% of your income over the lowest threshold of your undergraduate loan
- 6% of your income over the Postgraduate Loan threshold
Example – James has a Plan 2 and a Postgraduate Loan
James is a data analyst in Leeds, earning £2,400 a month. He took out a Plan 2 loan for his undergraduate studies and a Postgraduate Loan for his master’s.
- Over Postgraduate Loan threshold (£1,750): £650
→ 6% of £650 = £39 - Over Plan 2 threshold (£2,372): £28
→ 9% of £28 = £2.52 - Total monthly repayment = £41.52
Both repayments are combined and deducted from James’s salary automatically.
If you have two undergraduate plans, you’ll repay 9% over the lowest threshold, not separately for each plan.
How Does Employment Type Affect Repayment?
Your loan repayment method depends on your employment type. If you’re employed under PAYE, repayments are automatically deducted from your salary by your employer, much like income tax or National Insurance contributions.
For self-employed individuals, repayments are handled through the Self Assessment system, HMRC calculates how much you owe based on your tax return, taking into account any repayments already made through employment income.
If you work multiple jobs, repayments are only taken from the jobs where your individual income exceeds the repayment threshold for your loan plan, not your total combined earnings.
Example – Emily is Self-Employed
Emily is a freelance graphic designer earning £35,000 a year. She’s on Plan 2. Since she’s self-employed, she completes a Self Assessment tax return. HMRC calculates 9% of her income over £28,470.
- Annual income over threshold: £35,000 – £28,470 = £6,530
- Repayment: 9% of £6,530 = £587.70 annually (approx. £48.98/month)
Example – Tom Works Two Jobs
Tom works two part-time jobs, one pays £1,200/month and the other £1,000/month. He’s on Plan 1. Since neither salary exceeds the monthly threshold of £2,172, he doesn’t repay anything, even though his total monthly income is £2,200.
What If You Move Abroad or Work Internationally?
If you decide to live or work abroad after your studies, you’re still required to repay your UK student loan, but the repayment process changes.
Declaring Overseas Income to the SLC
Before leaving the UK, you must notify the Student Loans Company (SLC) and provide evidence of your overseas income. Failure to do this may place you on a default repayment plan with fixed charges that are typically higher.
Currency Conversion and Threshold Adjustments
The SLC adjusts your repayment threshold based on the cost of living in your country of residence, using World Bank data. This helps ensure that your repayments remain fair and in line with local economic conditions.
Payment Arrangements for Non-UK Residents
Once assessed, you’ll usually make monthly repayments directly to the SLC in your local currency. The frequency and amount may vary based on your income and location.
What Are the Current Interest Rates for UK Student Loans?
Interest accrues on your student loan from the day the first payment is made. However, the rate depends on your plan and (for Plan 2) your income.
Interest Rates by Plan (2025)
| Plan Type | Interest Rate |
|---|---|
| Plan 1 | 3.2% |
| Plan 2 | 3.2% to 6.2% (income-based) |
| Plan 4 | 3.2% |
| Plan 5 | 3.2% |
| Postgraduate | 6.2% |
For Plan 2, if your income is:
- £28,470 or less → 3.2%
- Between £28,471 and £51,245 → 3.2%–6.2% (sliding scale)
- Above £51,245 → 6.2%
This interest does not affect how much you repay monthly but determines how fast your loan grows if unpaid.
Can You Make Early Repayments or Request Refunds?
You have the option to make early repayments on your student loan, either in full or in part, without facing any penalties. However, it’s important to consider whether this is the best financial move for you.
If your income remains below the repayment threshold or your loan is likely to be written off before full repayment, paying early may not offer any real benefit.
Refunds can also be requested in two main cases, if your employer deducted repayments when your income was below the threshold, or if the Student Loans Company (SLC) made an overpayment due to a grant or loan error.
To stay informed and avoid issues, it’s best to regularly check your loan balance and repayment details online through the SLC’s official portal.
Conclusion
Understanding how much you need to earn before repaying your student loan can reduce financial stress and help you plan effectively. The UK’s income-contingent repayment system ensures fairness, adapting automatically to your financial situation.
Whether managing multiple loans, considering overseas work, or planning early repayment, staying informed about thresholds, rates, and repayment options is essential to remain in control.
For personalised repayment calculations and updates, contact the Student Loans Company (SLC) or refer to official UK government resources.
Frequently Asked Questions
Does a student loan affect your credit score in the UK?
No, it doesn’t appear on your credit report. However, mortgage lenders may consider your student loan repayments when assessing affordability.
Will student loan repayments impact my mortgage application?
Yes, indirectly. Monthly student loan repayments lower your disposable income, which can affect how much you’re allowed to borrow.
What if I take a career break or go on maternity leave?
Repayments stop automatically if your income falls below the threshold. There’s no penalty or interest increase in such cases.
Can I switch my repayment plan or consolidate loans?
No. Your plan is assigned based on when and where you studied. You cannot combine plans, but can make voluntary payments.
Is my pension or investment income counted toward repayments?
Only taxable income is counted. Some forms of investment income may be included via Self Assessment returns.
What happens if the Student Loans Company overcharges me?
You can request a refund. Keep copies of payslips and financial records to support your claim.
Are disability benefits considered in the income threshold?
No. Disability-related benefits are excluded. If you’re permanently unfit for work, your loan may be written off.
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