What is a student loan plan?
A student loan plan is the repayment category used to decide the income threshold and repayment rate for UK student loan deductions.
Student loan plan quick reference
Student loan plans explained in plain English
A student loan plan tells payroll or Student Loans Company which repayment rules apply to you. It does not mean everyone on that plan pays the same amount. Your repayment depends mainly on your income above the plan threshold.
For most UK employee deductions, you only repay when earnings are above the threshold for your plan. If your income falls below the threshold, repayment deductions normally stop until your income rises above it again.
The plan type matters because two graduates earning the same salary can have different deductions if they are on different plans. For example, Plan 2 and Plan 5 have different repayment thresholds in the 2026/27 tax year.
Student loan repayments are different from ordinary loan repayments. The monthly deduction is based on income and plan rules, not on a fixed schedule designed to clear a balance over a normal loan term.
Common UK student loan plans
The exact plan depends on where and when you studied, the funding body and the type of course. The table below is a practical summary, not a replacement for checking your Student Loans Company account.
| Plan | Commonly applies to | How repayments work |
|---|---|---|
| Plan 1 | Older undergraduate loans, often before Plan 2 rules came in. | 9% of income above the Plan 1 threshold. |
| Plan 2 | Many England and Wales undergraduate borrowers who started from 2012 to 2023. | 9% of income above the Plan 2 threshold. |
| Plan 4 | Many Scottish student loan borrowers. | 9% of income above the Plan 4 threshold. |
| Plan 5 | Many newer England undergraduate borrowers from the 2023/24 academic year onwards. | 9% of income above the Plan 5 threshold. |
| Postgraduate Loan | Postgraduate Master’s or Doctoral loan borrowers. | 6% of income above the postgraduate loan threshold. |
2026/27 UK repayment thresholds
For the 2026/27 tax year, the UK annual thresholds used for payroll deductions are:
| Plan type | Annual threshold | Monthly threshold | Repayment rate above threshold |
|---|---|---|---|
| Plan 1 | £26,900 | £2,241.66 | 9% |
| Plan 2 | £29,385 | £2,448.75 | 9% |
| Plan 4 | £33,795 | £2,816.25 | 9% |
| Plan 5 | £25,000 | £2,083.33 | 9% |
| Postgraduate Loan | £21,000 | £1,750.00 | 6% |
Note: thresholds and rules can change by tax year. If you live overseas, different overseas thresholds can apply.
How student loan repayments are calculated
For most payroll examples, the calculation is based on income above the plan threshold.
repayment = (income above threshold) × repayment rate
Example:
Plan 2 annual income = £35,000
Plan 2 threshold = £29,385
income above threshold = £5,615
annual repayment = £5,615 × 9%
annual repayment = £505.35
approx monthly repayment = £42.11
Estimate your student loan repayment
Use the student loan repayment calculator to compare Plan 1, Plan 2, Plan 4, Plan 5 and Postgraduate Loan deductions.
Simple student loan plan example
The same salary can produce different repayments depending on the plan threshold.
| Plan | Annual income | Threshold | Income above threshold | Approx annual repayment |
|---|---|---|---|---|
| Plan 2 | £35,000 | £29,385 | £5,615 | £505.35 |
| Plan 5 | £35,000 | £25,000 | £10,000 | £900.00 |
| Postgraduate Loan | £35,000 | £21,000 | £14,000 | £840.00 |
This example is simplified. Actual payroll deductions depend on pay frequency, payroll rounding and whether you have more than one applicable loan type.
What if you have more than one plan?
Some people have more than one student loan type. For example, you may have an undergraduate loan and a postgraduate loan. Payroll rules can handle different combinations differently, so your payslip may show both student loan and postgraduate loan deductions.
If you are unsure, check your Student Loans Company account, your repayment plan letter, your payslip, or ask payroll which plan notice they have received.
Student loan plan vs normal loan
What to check on your student loan plan
- Your plan type: check whether you are on Plan 1, 2, 4, 5 or Postgraduate Loan.
- Your income threshold: make sure you are using the correct tax year threshold.
- Your payslip deductions: check whether student loan and postgraduate loan deductions appear separately.
- Your employment status: employees, self-employed people and overseas borrowers can have different repayment processes.
- Your income changes: repayments usually rise or fall as income changes.
- Your account balance: monitor it with Student Loans Company, especially if you are close to clearing the loan.
Check monthly debt pressure
Use the DTI calculator if student loan deductions are part of a wider debt and affordability picture.
Common student loan plan mistakes
- Using the wrong plan threshold for your calculation.
- Assuming repayments are based on the full salary instead of income above the threshold.
- Forgetting that postgraduate loan repayments use a different rate.
- Comparing student loans with normal personal loans as if they work the same way.
- Not checking payslips after changing employer or income.
- Ignoring overseas repayment rules if you move abroad.