Why a UK Student Loan Is Not a Normal Loan
Most debt calculators assume you borrow a sum and pay it back with interest until it hits zero. UK student loans work differently. Repayment is income-contingent: you pay a percentage of your income above a fixed threshold, the amount is collected automatically through PAYE alongside tax and National Insurance, and the balance is cancelled entirely after a set number of years whether or not you have cleared it. That is why this calculator asks for your salary and plan type first — those, not the size of your balance, decide what actually comes out of your pay each month.
A Worked Example on Plan 2
Say you started university between 2012 and 2023, so you are on Plan 2, and you earn £35,000. Repayments only apply to income above the Plan 2 threshold of about £27,295, which leaves £7,705. You repay 9% of that: roughly £693 a year, or around £58 a month. Notice that your loan balance never entered the sum — a £20,000 debt and a £55,000 debt produce the identical £58 monthly figure on this salary. Crucially, Plan 2 balances are written off about 30 years after you become eligible to repay, and many graduates never repay in full before that happens, so a bigger headline balance does not always mean paying more over your lifetime.
Thresholds Differ by Plan
The plan you are on sets both the threshold and the write-off clock. Plan 1 (courses started before September 2012) has a lower threshold near £22,015 and a 25-year write-off. Plan 2 sits at about £27,295 with a 30-year write-off. Plan 5 (courses started from September 2023) uses roughly £25,000 but stretches the write-off to 40 years, meaning many Plan 5 borrowers will repay for most of their working lives. Scotland's Plan 4 and the Postgraduate Loan have their own thresholds again. Pick the correct plan above, because getting it wrong changes every number the tool returns.
UK Student Loan Repayment Calculator
How It Works
A UK student loan is not a normal loan. It behaves like an extra payroll deduction that switches on once you earn over a set threshold and switches off completely if the balance is written off before you clear it. The size of your loan barely matters month to month; your salary is what drives the repayment. This tool takes your plan type and gross salary, applies the correct threshold and percentage, and shows what actually leaves your pay each month.
The basic rule:
- Monthly repayment = (Salary − Threshold) × 9% ÷ 12 (6% for Postgraduate)
- Plan 1 threshold: £22,015, Plan 2: £27,295, Plan 5: £25,000
- Write-off: Plan 1 after 25 years, Plan 2 after 30 years, Plan 5 after 40 years
- Balance grows by interest rate annually, reduced by repayments
The 'years to repay' and 'total repaid' figures assume steady salary growth and are projections, not promises. Because the balance is wiped after your plan's write-off period regardless of what is left, a large loan does not necessarily mean you pay more overall. These estimates are for planning only and are not financial advice.
Frequently Asked Questions
How does UK student loan repayment actually work?
Repayment is income-contingent, so it is tied to what you earn rather than what you borrowed. You pay nothing until your income passes your plan's threshold, then 9% of everything above it (6% for Postgraduate loans) is collected automatically through PAYE, the same way income tax and National Insurance are. If your income drops below the threshold, repayments stop that pay period. It is closer to a graduate contribution than a mortgage-style debt.
What is the repayment threshold and how does it affect me?
The threshold is the annual income level below which you repay nothing. For 2024-25 it is £27,295 on Plan 2, £22,015 on Plan 1, £27,660 on Plan 4 (Scotland), £25,000 on Plan 5, and £21,000 on the Postgraduate Loan. You are only charged 9% on the slice of income above the threshold, so a lower threshold (like Plan 1) means you start repaying sooner, and a higher one means more of your salary is protected.
How much would I repay on Plan 2 earning £35,000?
You subtract the £27,295 threshold to get £7,705, then take 9% of that: about £693 per year, or roughly £58 a month. Your outstanding balance and interest rate do not change this figure at all — only your income and threshold do. Someone with a £15,000 loan and someone with a £60,000 loan on the same salary pay exactly the same £58 a month.
Is it worth overpaying my UK student loan?
For many Plan 2 and Plan 5 graduates, no. Because the loan is written off after 30 years (Plan 2) or 40 years (Plan 5) and repayments are capped at 9% of income above the threshold, a large share of borrowers never clear the full balance before write-off. If that is you, voluntary overpayments simply hand money to the Student Loans Company that would otherwise have been cancelled. Overpaying tends to help only higher earners who will realistically repay in full and want to cut the interest. Run your own numbers before paying a penny extra.
When is my student loan written off?
It is cancelled a set number of years after you first became eligible to repay, with any remaining balance wiped and nothing more owed. Plan 2 is written off after 30 years, Plan 1 after 25 years, Plan 4 after 30 years, Plan 5 after 40 years, and Postgraduate loans after 30 years. This deadline is why the income-contingent design matters so much: for a lot of people the write-off arrives before the debt is ever fully repaid.
What is the interest rate and does it change what I pay each month?
Plan 1 and 4 charge the lower of RPI or the Bank of England base rate plus 1%. Plan 2 charges RPI plus up to 3% depending on income, currently capped around 7.3%. Plan 5 charges RPI only, and Postgraduate charges RPI plus 3%. Interest changes how fast the balance grows, but on income-contingent plans it does not change your monthly deduction — that is fixed at 9% of income above the threshold regardless of the rate.