Student loan repayment plans: thresholds and rates
UK student loans are repaid as a percentage of income above a plan-specific threshold. The threshold and rate depend on which plan the borrower is on, which is determined by when the course started and which student finance body handled the loan.
On this page
- Plan 1 threshold
- £26,900 per year (£2,241 per month, £517 per week). Rate: 9% of income above the threshold.
- Plan 2 threshold
- £29,385 per year (£2,448 per month, £565 per week). Rate: 9% of income above the threshold.
- Plan 4 threshold
- £33,795 per year (£2,816 per month, £649 per week). Rate: 9% of income above the threshold.
- Plan 5 threshold
- £25,000 per year (£2,083 per month, £480 per week). Rate: 9% of income above the threshold.
- Postgraduate Loan threshold
- £21,000 per year (£1,750 per month, £403 per week). Rate: 6% of income above the threshold.
The plan determines the threshold and rate; borrowers do not choose their plan
A borrower repays their student loan as a percentage of income above the threshold set for their repayment plan. The plan is determined by when the course started and which UK country's student finance body handled the loan, not by the borrower's choice. England, before September 2012: Plan 1. England, September 2012 to July 2023: Plan 2. England, from August 2023: Plan 5. Scotland: Plan 4. Wales: Plan 1 or Plan 2. Northern Ireland: Plan 1. GOV.UK, Which repayment plan you're on (opens in a new tab).
Repayments are based on income above the threshold, not the loan balance
The monthly repayment is worked out as a percentage of income above the threshold, not as a percentage of what is owed. A borrower with a large outstanding balance and income just above the threshold repays the same amount as a borrower with a smaller balance and the same income. GOV.UK, How much you repay (opens in a new tab).
On Plan 1 with a salary of £30,000 a year, the monthly income of £2,500 is above the Plan 1 monthly threshold of £2,241. The amount above the threshold is £259, and 9% of £259 is £23.31, which gives a monthly repayment of £23. The loan balance is not used in this calculation. This illustration leaves out other repayment plans, postgraduate loans, bonuses and changes in pay.
Repayments are worked out on each pay period's income, so they rise or fall with pay; a bonus or overtime that takes pay over the weekly or monthly threshold triggers a repayment, and a refund can be claimed at the end of the tax year if annual income was below the yearly threshold. A new employer needs to be told which repayment plan the borrower is on. GOV.UK, How much you repay (opens in a new tab).
Repayments are collected through PAYE for employees and through Self Assessment for self-employed borrowers. GOV.UK, How much you repay (opens in a new tab).
When student loans are written off
Student loans are not lifelong debts. Plan 1 loans first paid on or after 1 September 2006 are written off 25 years after the April the borrower was first due to repay; those first paid before 1 September 2006 are written off at age 65. Plan 2 loans are written off 30 years after the April the borrower was first due to repay. Plan 4 loans first paid on or after 1 August 2007 are written off after 30 years; those first paid earlier are written off at 65 or after 30 years, whichever comes first. GOV.UK, When your student loan gets written off or cancelled (opens in a new tab).
This page is an original explanation based on GOV.UK pages under the Open Government Licence v3.0; the wording has been adapted and GOV.UK does not endorse this website. This page covers England, Wales, Scotland and Northern Ireland student loans but not postgraduate loans from outside the UK.