Student loan repayments — all plans explained

How do repayments actually work?

UK student loan repayments don’t behave like a normal debt. There’s no fixed monthly payment to clear a balance. Instead:

• You repay a percentage of income above a threshold — not a percentage of all your income. If your plan’s threshold is £29,385 and you earn £35,000, the 9% rate only applies to the £5,615 above the threshold.
• It’s collected through PAYE, automatically, just like income tax. You don’t need to set up payments or apply for anything.
• It’s income-contingent. If your income is below the threshold, no repayment is normally due through PAYE for that period — there’s no minimum payment to keep the loan in good standing.
• It’s not balance-driven. Your repayment is determined by your income, not by how much you owe. Any remaining balance is usually written off after the relevant plan’s write-off period.

What are the plans, and how do they compare?

There are five plan types in active use. The thresholds below are the 2026/27 figures the PayFluency calculator uses:

All five use the “income above threshold × rate” formula. The differences are which threshold applies to you, and whether you’re repaying one plan or two (the postgraduate loan is calculated separately and runs alongside any undergraduate plan).

Which plan am I on?

Broadly, plan assignment depends on where and when you started your course:

• Plan 1: English or Welsh students who started before September 2012. Also covers students from Northern Ireland.
• Plan 2: English or Welsh students who started between September 2012 and July 2023.
• Plan 4: Scottish students.
• Plan 5: English students who started from August 2023 onwards.
• Postgraduate Loan: Master’s or doctoral loans, repaid alongside any undergraduate plan you’re on.

You can be on two plans at once — an undergraduate plan plus the postgraduate plan — and pay both simultaneously. A Plan 2 borrower with a postgraduate loan repays 9% above £29,385 and 6% above £21,000 on the same income. Both percentages stack.

What does this look like with real numbers?

Take a salary of £45,000 on Plan 2:

Now add a £10,000 RSU vest in the same tax year. Combined income becomes £55,000 — the full vest sits above the £29,385 threshold, so the entire £10,000 attracts the 9% rate:

That £900 is 9% of the full £10,000 vest — because the salary alone has already used up the threshold, every pound of the vest attracts the rate. If the same person also held a postgraduate loan, the vest would attract 9% + 6% = £1,500 in repayments.

What about RSUs, bonuses and other income?

This is the part most explanations skip, and it’s the one that matters most if you have equity or bonus pay. For employment income, student loan repayments apply to more than base salary. RSU vests, sign-on bonuses and annual bonuses can all count when they are processed through payroll.

The practical effect: a large vest or bonus in a single tax year triggers a one-off jump in repayments for that year. It’s not deducted across the rest of your loan term — it lands in the year the income lands. For someone with two plans (undergraduate plus postgraduate), the combined rate on that extra income is 9% + 6% = 15%, on top of income tax and employee National Insurance.

What happens to the balance?

Because repayments are income-contingent rather than balance-driven, the relationship between what you owe and what you pay is looser than with a normal loan:

• You pay the same regardless of your balance. Two people on the same plan with the same income pay the same, whether one owes £20,000 and the other £80,000.
• The loan is written off after a set period. The period varies by plan — Plan 2 is commonly 30 years from the April after you become liable to repay; Plan 5 is 40 years. Exact write-off rules depend on plan and start date.
• Interest accrues throughout. For many borrowers, the balance may not be fully repaid before write-off, because income-contingent repayments may not keep pace with interest.

What does this make possible?

Knowing which plan you’re on, where its threshold sits, and that repayments apply to your whole income — including vests and bonuses — means you can anticipate how much of a pay rise, bonus or vesting event may be absorbed by repayments, rather than being surprised by it on your payslip. It also means you can compare offers more accurately: a £10,000 higher salary at the same plan is around £900 more in repayments per year, before any tax considerations.