Answers · UK 2025/26

How does a Postgraduate Loan work alongside an undergraduate Plan loan?

If you have both an undergraduate loan (Plan 1, 2, 4 or 5) and a Postgraduate Loan, both are repaid simultaneously and independently -- 9% above the undergraduate threshold on the Plan loan, PLUS a separate 6% above a lower Postgraduate Loan threshold (around £21,000) -- so you can be making two separate deductions from the same salary at once.

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Many graduates who complete a taught or research postgraduate qualification funded by a Postgraduate Master's Loan or Postgraduate Doctoral Loan are surprised to find they end up repaying two separate student loans simultaneously once they are working, rather than one combined loan. **Two separate, independent calculations** An undergraduate Plan loan (Plan 1, 2, 4, or 5 depending on where and when you studied) is repaid at 9% of income above its own threshold. A Postgraduate Loan is repaid completely separately, at a lower rate of 6% of income above its own, generally lower, threshold (around £21,000, frozen). These two deductions run in parallel from the same payslip -- your employer applies both calculations to your gross pay and deducts both amounts. **Worked example** A graduate earning £35,000 has a Plan 2 undergraduate loan (threshold approximately £28,470) and a Postgraduate Master's Loan (threshold £21,000). Their Plan 2 repayment is 9% x (£35,000 − £28,470) = 9% x £6,530 = £587.70 a year. Their Postgraduate Loan repayment is calculated completely separately: 6% x (£35,000 − £21,000) = 6% x £14,000 = £840 a year. Total student loan deductions for the year: £587.70 + £840 = £1,427.70 -- a combined effective rate of up to 15% of income above the (lower) Postgraduate threshold, considerably more than either loan alone would suggest. **Why the combined rate can feel steep** Because the Postgraduate Loan threshold is lower than most undergraduate Plan thresholds, and because the two loans are calculated independently rather than as one combined percentage of income above a single higher threshold, borrowers with both types of loan face what is effectively up to a 15% marginal deduction rate (9% + 6%) on income between the Postgraduate threshold and the undergraduate threshold, on top of Income Tax and National Insurance -- a combination that can push total marginal deductions on that slice of income surprisingly high. **Interest and write-off differ too** Postgraduate Loans have their own separate interest rate and write-off period (typically 30 years from when repayments become due), independent of whatever write-off period applies to the borrower's undergraduate Plan loan -- so a borrower could see their undergraduate loan written off while continuing to repay a still-outstanding Postgraduate Loan, or vice versa, depending on the size and repayment history of each. **What to check on your payslip** If you have both types of loan, your payslip should show two separate student loan deduction lines (sometimes labelled 'Student Loan' and 'Postgraduate Loan' or similar) -- if you only see one deduction and believe you should have both, contact your employer's payroll team or HMRC to check both loan types have been correctly notified and applied, since missing one entirely means under-repayment building up that will eventually need to be caught up.