UK Student Loan Repayment Calculator

Student Loan Guide

How UK Student Loan Repayments Work?

UK student loans are income-contingent — you only repay when earning above a threshold, and repayments are a percentage of income above that threshold. Plan 2: repay 9% of income above £27,295 per year. Plan 5: repay 9% of income above £25,000 per year. Plan 1: 9% above £22,015. Postgraduate: 6% above £21,000. Example (Plan 2, £35,000 salary): repay 9% × (£35,000 − £27,295) = 9% × £7,705 = £693/year = £57.75/month. This is taken via PAYE automatically.

What should I know about Interest Rates and Write-Off?

Plan 2 interest: while studying — RPI + 3%. After graduation, interest tapers from RPI (earning under £27,295) up to RPI+3% (earning over £49,130), rising linearly in between. Plan 5 interest: capped at 7.3% for 2026/27. Write-off: Plan 2 loans are written off 30 years after the April following graduation. Plan 5: written off 40 years after graduation. Plan 1: at age 65. The key insight: many graduates, particularly in lower-paid professions, will never repay the full balance — the debt is written off after the term ends, making the student loan function more like a graduate tax on earnings above the threshold than a conventional debt that must always be repaid.

Should You Overpay?

For most Plan 2 borrowers, overpaying the student loan is rarely advisable. If the loan will be written off before clearance (common for teachers, nurses, social workers, those in the arts), paying extra is simply paying more than you would have paid — the write-off erases the remaining balance regardless. Only overpay if you are in a high-earning career trajectory that makes full repayment near-certain before write-off, AND your student loan interest rate exceeds what you could reasonably earn investing that same money elsewhere — for most graduates, neither condition holds, making overpayment rarely the optimal choice.

What should I know about The Marginal Rate Effect?

The 9% repayment on income above the threshold effectively increases your marginal tax rate on that income. For a basic rate (20%) Plan 2 borrower: marginal rate = 20% income tax + 10% National Insurance + 9% student loan = 39% on income between threshold and higher-rate threshold. For higher-rate taxpayers: 40% + 2% + 9% = 51% marginal rate. Understanding this helps with salary negotiation (£1,000 raise costs you £390–510) and decisions about additional pension contributions (which reduce taxable income and can lower the effective student loan repayment rate at the same time as cutting tax).

Why Student Loan Repayment Often Works Like a Tax, Not a Traditional Loan

In systems like the UK's income-contingent student loan, repayment is calculated as a fixed percentage of income above a threshold, not as a fixed monthly instalment sized to clear the balance in a set number of years. This means your repayment amount rises and falls directly with your income, drops to zero if you earn below the threshold, and — crucially — is written off entirely after a fixed number of years regardless of how much remains outstanding. Because of this structure, many graduates with large balances relative to their likely lifetime earnings will never repay the loan in full before it's written off, which changes the entire framing of the debt: it behaves far more like a graduate tax tied to income than a conventional debt you're trying to minimize or pay off early.

Does It Ever Make Sense to Make Voluntary Extra Repayments?

Because income-contingent loans write off the remaining balance after a set term, voluntary overpayments only benefit borrowers who are on track to clear the full balance (plus accrued interest) before that write-off date — for anyone projected to still owe a balance at write-off, extra payments simply hand money to the loan provider that would otherwise have been forgiven. Before overpaying, it's worth running a realistic lifetime income projection against the applicable interest rate and threshold to see which camp you fall into; high earners early in well-paid careers are far more likely to benefit from extra repayments than someone with a typical graduate income trajectory, for whom the loan functions, in practice, as a tax that simply stops after enough years.

Postgraduate Loans and Having Multiple Plans at Once

Someone who took out a postgraduate loan for a master's or doctoral degree on top of an undergraduate loan doesn't repay them as one combined debt; postgraduate loans run on an entirely separate plan, with their own lower repayment threshold and their own fixed repayment rate, deducted independently of whichever undergraduate plan (1, 2, 4, or 5) applies. In practice this means a graduate with both an undergraduate and a postgraduate loan outstanding can have deductions taken for both at the same time once their income clears each respective threshold, since the two thresholds and rates are assessed separately rather than netted into a single calculation. This can produce a combined marginal deduction rate noticeably higher than either loan alone would suggest; for example, a worker above both thresholds might see deductions from undergraduate and postgraduate plans stacked on top of income tax and National Insurance, meaningfully reducing the proportion of a pay rise that actually reaches take-home pay. Because the two loans are written off independently too, with their own separate write-off periods from the point each loan started, it's possible for the postgraduate loan to be cleared or written off at a different time than the undergraduate loan, even though both show as one combined deduction on a payslip.

Plan 1, Plan 2, Plan 4, Plan 5 and Postgraduate Loans Compared

Which plan applies depends mainly on where you lived and when you started your course, and each plan has its own repayment threshold, repayment rate and write-off period, set independently of the others. Exact thresholds move with inflation and policy changes most tax years, so treat the figures below as the current general shape rather than fixed numbers.

The practical effect of the Plan 5 changes is a lower threshold and a much longer 40-year write-off window than Plan 2, which means a larger share of Plan 5 borrowers are projected to repay their loan in full before it's written off compared with Plan 2 borrowers on broadly similar incomes — worth knowing if you're deciding how seriously to weigh overpayment.

How Interest Builds Up Before You've Even Graduated

Interest on most UK student loans starts accruing from the first payment of the loan, not from when repayments begin — so a student studying a three-year degree can graduate with a noticeably larger balance than the sum of everything actually borrowed, purely from interest accrued during the study years, when the rate is typically set at the higher end of the plan's range (commonly RPI plus a few percentage points while studying, before tapering based on income after graduation on some plans). As an illustrative, simplified example: a student borrowing roughly £15,250 a year (combining a typical tuition fee loan and maintenance loan) across three years, with each year's borrowing accruing an illustrative 6% average annual interest rate for however long it remains outstanding before graduation, would see roughly £900 of interest build on the first year's borrowing (outstanding for about three years), £600 on the second year's borrowing (two years outstanding) and £300 on the final year's borrowing (one year outstanding) — around £1,800-£2,000 of interest added on top of the roughly £45,750 actually borrowed, before a single repayment is even due. This is a simplified illustration, not a compounding day-by-day calculation, but it demonstrates why many graduates are surprised that their loan balance on the day repayments start already exceeds what they remember drawing down term by term — and, combined with the income-contingent, eventually-written-off nature of the loan discussed elsewhere on this page, it's one more reason the balance figure itself matters far less to most borrowers than the repayment threshold and the number of years until write-off.