Practise calculating annual student loan repayments across Plan 1, Plan 2, Plan 5 and Postgraduate Loan thresholds.
A graduate on Plan 2 (2012–2023, England/Wales) earns £65,000 per year. What is their annual student loan repayment?2026/27 threshold. Enter 0 if below threshold.
Answers accepted within £1
Student loan repayments in the UK are calculated as a percentage of income above a plan-specific threshold -- not on the full salary. Getting this right matters for anyone checking their payslip, planning a career move, or modelling the total cost of their degree.
The four main plans use different thresholds: Plan 1 (most pre-2012 borrowers in England/Wales and all Scottish borrowers) uses a threshold of £26,900; Plan 2 (most English/Welsh graduates from 2012-2023) uses £29,385; Plan 5 (English students starting from 2023 onwards) uses £25,000; and the Postgraduate Loan uses £21,000 at 6% instead of 9%.
For Plans 1, 2 and 5, the repayment rate is 9% of income above the threshold. Plan 1 and 2 can run concurrently for borrowers with both undergraduate and postgraduate loans, so total repayments can reach 9% + 6% = 15% above both thresholds.
Repayments are collected through PAYE by HMRC alongside Income Tax and National Insurance. They appear on payslips as a separate deduction. Crucially, student loan repayments do NOT reduce taxable income -- they are calculated after Income Tax and NI have been deducted from gross salary, meaning you cannot use loan repayments to reduce your tax bill.
Loan balances are written off after 25 years (Plan 2), 30 years (Plan 5), or at retirement age (Plan 1). Interest accrues at RPI or RPI+3% (Plan 2) -- but many borrowers never repay in full before write-off, which changes the economic calculus of voluntary overpayments.
Plans 1, 2 and 5 all charge 9% on income above the plan threshold. The Postgraduate Loan charges 6% above £21,000. Repayments are calculated annually but deducted monthly through PAYE.
Plan 1: £26,900; Plan 2: £29,385; Plan 5: £25,000; Postgraduate Loan: £21,000. Income below the relevant threshold has zero repayment. These thresholds are reviewed annually.
No. Student loan repayments are calculated after Income Tax and National Insurance and do not reduce your taxable income. You cannot use loan repayments to lower your tax bill.
Repayments run concurrently. You pay 9% above the Plan 2 threshold AND 6% above £21,000 for the postgraduate loan. HMRC collects both through PAYE as separate deductions.
Plan 1: age 65 or 25 years after the April following first repayment (whichever comes first). Plan 2: 30 years after entering repayment. Plan 5: 40 years after entering repayment. Postgraduate Loan: 30 years after entry.
It depends on which plan you are on and your likely career earnings. For Plan 2 and Plan 5 borrowers who are unlikely to repay in full before write-off, overpayments may be wasted. For Plan 1 borrowers approaching write-off age, the calculation is different. Use a student loan calculator to model your specific case.
As a separate deduction line labelled "Student Loan" (Plan 1/2/5) or "Postgrad Loan". It is collected by HMRC alongside PAYE tax and NI. If you change jobs, notify your new employer which plan you are on so the correct threshold is applied.
Yes. Lenders treat student loan repayments as a committed monthly outgoing when assessing affordability. A Plan 2 borrower earning £40,000 pays roughly £87/month in loan repayments, which reduces the mortgage a lender will offer. Use a mortgage affordability calculator to see the combined impact.
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