Glossary · UK
What is Student Loan Repayment?
A fixed percentage of income above a plan threshold, collected through PAYE or Self Assessment.
Full Definition
UK student loan repayments are income-contingent: you repay a percentage of everything you earn above your plan threshold, not a fixed monthly bill. For undergraduate plans the rate is 9%; for Postgraduate Loans it is 6%, and the two run side by side if you have both. Thresholds differ by plan (for 2026/27, Plan 2 is GBP 29,385, Plan 5 GBP 25,000, Postgraduate GBP 21,000). The balance is written off after a set period regardless of how much is left, so for many graduates voluntary overpayment is money spent on a debt that would have been cancelled. Repayments stop automatically once the loan is cleared.
How Student Loan Repayment is calculated
Annual repayment = max(0, Salary - Threshold) x rate- Threshold
- Plan 2 GBP 29,385; Plan 5 GBP 25,000; Postgraduate GBP 21,000 (2026/27).
- rate
- 9% for undergraduate plans, 6% for Postgraduate Loans.
Worked example: On a GBP 40,000 salary with a Plan 2 loan: (40,000 - 29,385) x 9% = 10,615 x 9% = about GBP 955 a year (around GBP 80 a month).