Quick Answer: On Plan 2 with an income of £35,000, you repay £505.35 a year, or £42.11 a month. That is 9% of the £5,615 by which your income exceeds the £29,385 threshold, not 9% of your whole salary. The same income on Plan 5, whose threshold is only £25,000, costs £900 a year instead.
Overview
UK student loan repayments are charged as a percentage of income above a threshold, not on the whole of it. Which threshold applies depends on your plan, and the plans differ substantially: the gap between the Plan 4 threshold of £33,795 and the Plan 5 threshold of £25,000 is nearly £9,000, which is £790 a year of repayments at the same salary.
A postgraduate loan is repaid at the same time as an undergraduate one, not instead of it. Someone with a Plan 2 loan and a postgraduate loan pays 9% and 6% concurrently on the bands above each threshold, which is the detail most calculators get wrong.
How This Is Calculated
Undergraduate plans are charged at 9% of income above the plan threshold:
Thresholds for 2026/27 are Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795 and Plan 5 £25,000.
Postgraduate loans are charged at 6% of income above £21,000, computed independently and added to any undergraduate repayment. Because the postgraduate threshold is lower than every undergraduate threshold, someone with both loans is paying on two overlapping bands at once, giving a combined marginal rate of 15% on income above their undergraduate threshold.
The monthly figure shown is the annual amount divided by twelve. Repayments are actually deducted per pay period against a weekly or monthly threshold, so a month with irregular pay will not match exactly.
Worked Example
Plan 2, £35,000 income:
- Income above threshold: £35,000 − £29,385 = £5,615
- Repayment: £5,615 × 9% = £505.35 a year, £42.11 a month
- That is 1.44% of total income, despite the headline rate being 9%
Plan 5, £35,000 income:
- Income above threshold: £35,000 − £25,000 = £10,000
- Repayment: £10,000 × 9% = £900 a year
Plan 2 plus a postgraduate loan, £40,000 income:
- Plan 2: (£40,000 − £29,385) × 9% = £10,615 × 9% = £955.35
- Postgraduate: (£40,000 − £21,000) × 6% = £19,000 × 6% = £1,140.00
- Total: £2,095.35. The postgraduate loan costs more here than the undergraduate one, because its threshold is £8,385 lower.
What This Does Not Account For
- Interest accruing on the balance. Student loan interest is set by reference to RPI and, on some plans, to income. This calculator shows what you repay in a year, not what happens to the outstanding balance.
- Whether the loan will ever be repaid in full. Plans are written off after a set period (25, 30 or 40 years depending on the plan), and many borrowers never clear the balance. Repayments are better understood as a graduate contribution than as a loan in the ordinary sense.
- Voluntary overpayments, which are permitted but rarely worthwhile for borrowers unlikely to clear the balance before write-off.
- Per-pay-period calculation. Deductions are made against weekly or monthly thresholds, so bonuses and irregular pay can produce a deduction in one period that annual figures do not reflect.
- Self Assessment. Self-employed borrowers repay through their tax return rather than payroll, based on total taxable income.
- Plan 3 (postgraduate) terminology. HMRC payroll guidance sometimes calls the postgraduate loan "Plan 3"; it is the same loan handled here.
- Repayments while overseas, where fixed thresholds by country apply rather than the UK ones.
Common Pitfalls
- Thinking 9% applies to your whole salary. It applies only to the excess above the threshold. At £35,000 on Plan 2 the effective rate on total income is 1.44%, not 9%.
- Assuming a postgraduate loan replaces the undergraduate one. They run concurrently. Someone with both pays 15% at the margin above their undergraduate threshold.
- Picking a plan by start year alone. Plan 4 is defined by studying in Scotland, not by year. Plan 1 covers all Northern Ireland borrowers regardless of when they started.
- Comparing plans without checking the threshold. Plan 5 has the same 9% rate as Plan 2 but a threshold £4,385 lower, which costs an extra £394.65 a year at any income above both.
- Expecting overpayments to reduce a monthly deduction. They do not. The deduction is a function of income, not of the outstanding balance, until the loan is cleared entirely.
Frequently Asked Questions
Which plan am I on?
Do I repay a postgraduate loan on top of my undergraduate one?
Why is my repayment zero when I have a loan?
Does my repayment change if my balance is nearly cleared?
Should I overpay to clear it faster?
Sources
- GOV.UK guidance: "Rates and thresholds for employers 2026 to 2027" -- Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000, Postgraduate £21,000
- GOV.UK: "Repaying your student loan" -- 9% on undergraduate plans, 6% on postgraduate loans
- All figures verified on 30 August 2026 and mirrored in engine/tables/2026/uk-2026-27.json