Repaying your student loan

You will fall into one of five different Student Loans Company repayment plans. The payment plans are labelled Plan 1, Plan 2, Plan 4, Plan 5 and Postgraduate Loan (the Postgraduate Loan is technically “Plan 3” in HMRC's system, but the Student Loans Company doesn't publicly refer to it as such).

So, first things first, you can use the information below to determine which repayment plan you are on or will enter.

Student Loan: Payment Plan 1

If you applied to Student Finance England, and your course commenced before 1 September 2012, you're on Plan 1.​

Student Loan: Payment Plan 1 – Wales

If you applied to Student Finance Wales, and your course commenced before 1 September 2012, you're also on Plan 1.​

Student Loan: Payment Plan 2

If you applied to Student Finance England, and your course commenced between 1 September 2012 and 31 July 2023, and you fall into any of the scenarios below, you're on Plan 2:

• You take out a “Higher Education Short Course Loan.”
• You take out an “Advanced Learner Loan.”
• You are studying an “Undergraduate Course.”
• You are studying for a “Post Graduate Certificate of Education.”

Student Loan: Payment Plan 2 – Wales

You are also on Payment Plan 2 if you fall into all three scenarios below:​

• You applied to Student Finance Wales.
• You studied for a “Post Graduate Certificate of Education” or an undergraduate course.
• You began your course on or after 1 September 2012.

Student Loan: Payment Plan 5 (Repayments start from April 2026)

Plan 5 is the newest repayment plan, and April 2026 is a big moment — it's when the very first Plan 5 repayments begin. If you applied to Student Finance England, and your course commenced on or after 1 August 2023, and you fall into any of the scenarios below, you're on Plan 5:

• You decide to take out an “Advanced Learner Loan.”
• You are studying an “Undergraduate Course.”
• You are studying for a “Post Graduate Certificate of Education.”

Plan 5 has notable differences from Plan 2. Its repayment threshold is lower at £25,000, versus £29,385 for Plan 2 starting April 2026. However, it offers a more favourable interest rate, based solely on RPI with no additional percentage. The main trade-off is that your loan won't be written off for 40 years, rather than 30 under Plan 2.

Postgraduate Loan Plan

If you are studying a doctoral course or a Postgraduate Masters, you'll be on the Postgraduate Loan plan.​

We're not quite finished yet; we can't forget our readers in Scotland and Northern Ireland.

Student Awards Agency Scotland (Plan 4)

If you applied to the Student Awards Agency Scotland, you are on Plan 4, whether you studied an undergraduate or postgraduate course.

Student Finance Northern Ireland (Plan 1)

If you applied to Student Finance Northern Ireland, you are on Plan 1, whether you studied an undergraduate or postgraduate course.

When it comes to paying off your student loan debt, it's not just a question of “when” but also “if”. The Student Loans Company recognises that to repay your loan, you must have some form of income, so there is a threshold. If you never reach this threshold, you might not have to make any repayments.

There is a brief period after your course concludes before loan repayments begin:​

• Most of the time, it will be the month of April that follows your course completion.
• If you're studying part-time or your course is a Postgraduate Doctoral course lasting more than four years, your loan repayments will commence in April, four years after your course starts.
• If you're on Plan 5, your repayments will commence in April 2026 — this is the first tax year that Plan 5 repayments are collected. If you’re self-employed, repayments are calculated through Self Assessment and are paid as part of your bill due 31 January after the end of the tax year.

For many students, this could provide 6–9 months of breathing room before repayments commence, assuming you already meet the repayment threshold.

Now, let’s discuss repaying your student loan. The amount you repay depends on the plan you are on and your income.

For Plans 1, 2, 4 and 5, you will pay 9% of the amount you earn above the threshold, whereas for the Postgraduate Loan plan, you will pay 6% of the amount you earn over the threshold.​

Student Loan Repayment Thresholds from 6 April 2026

Let's look at the repayment income thresholds for each plan for the 2026/27 tax year (from 6 April 2026). To keep things simple, below are the weekly, monthly and yearly thresholds you need to know.

• Plan 1 – You are only required to make loan repayments once your income exceeds £517 per week, £2,241 per month or £26,900 per year.
• Plan 2 – You are only required to make loan repayments once your income exceeds £565 per week, £2,448 per month or £29,385 per year.
• Plan 4 – You are only required to make loan repayments once your income exceeds £650 per week, £2,816 per month or £33,795 per year.
• Plan 5 – You are only required to make loan repayments once your income exceeds £480 per week, £2,083 per month or £25,000 per year.
• Postgraduate Loan plan – You only have to make loan repayments once your income exceeds £403 per week, £1,750 per month or £21,000 per year.

Keep in mind that each of the above figures is calculated before tax and other deductions like National Insurance. Additionally, the threshold amount might change each year on 6 April.

To give you an idea of how things have moved, take a look at the following:

• Plan 1 has increased from £26,065 in 2025/26 to £26,900 in 2026/27 — a rise of £835.
• Plan 2 has increased from £28,470 to £29,385, a rise of £915.
• Plan 4 has increased from £32,745 to £33,795, a rise of £1,050.
• Plan 5 repayments are new from April 2026, with a threshold of £25,000.
• The Postgraduate Loan threshold remains at £21,000 — unchanged from last year.

Important to note: in the November 2025 Budget, the Government announced that the Plan 2 threshold will remain at £29,385 for three years, starting in April 2027. This means that Plan 2 borrowers won't experience a threshold increase until at least April 2030. As wages increase but the threshold remains fixed, an increasing number of graduates will repay a larger share of their income over time.

Yay, interest!

This part is not so fun, but it's essential for you to understand. For many, this will be their first exposure to the realities of the financial world.

Interest rates on student loans are set each September, based on the Retail Price Index (RPI) from March of that year. For the period from September 2025 to August 2026, the RPI figure being used is 3.2%, and the rates are expected to look like this:

• Plan 1 – Interest rate is 3.2%, which is the lower amount between RPI (3.2%) and the Bank of England base rate plus 1%.
• Plan 2 – Interest rates range from 3.2% to 6.2%. If your earnings are at or below the repayment threshold (£29,385 from April 2026), you are charged RPI only (3.2%). As your income approaches around £52,885, the rate gradually increases up to RPI + 3% (6.2%). If your earnings exceed that upper level, you pay the maximum 6.2%.
• Plan 4 – Interest rate is 3.2%, determined using the same mechanism as Plan 1 (the lower of RPI or base rate plus 1%).
• Plan 5 – Interest rate is 3.2%, and it's always set at RPI only — there is no additional percentage added, regardless of your income.
• Postgraduate Loan – Interest rate is 6.2%, which is RPI + 3% at all times, with no sliding scale.

For Plan 5 borrowers, the good news is that your interest rate is always based solely on RPI — currently 3.2% — regardless of your income. This offers a real benefit compared to Plan 2, especially for those with higher earnings.

These rates can change throughout the year if the Bank of England base rate moves, especially for Plan 1 and Plan 4. If you're keen on staying updated, it's a good idea to check GOV.UK from time to time.

Now that you understand your repayment plan and the expected payments, let's review how to make your student loan repayments.

Your repayments are automatically deducted from your salary when you are paid. Typically, these payments are made through payroll (PAYE). HMRC issues an SL1 start notice to employers, instructing them on the plan type to use.

Starting April 2026, HMRC will send SL1 start notices to employers for Plan 5 borrowers beginning repayments. If you're a Plan 5 borrower making your first repayment, ensure your employer is aware of your plan type — any mistake could lead to incorrect deduction amounts from your pay.

If you're self-employed, HMRC calculates what you owe via your Self Assessment. You need to pay this amount directly to HMRC at the same time you settle your taxes. For those on Plan 5 who are self-employed, their repayments through Self Assessment won't start until April 2027.

What Does the Student Loans Company Need from You?

The Student Loans Company will likely contact you via email or letter to request that you update your employment details. They will want to know if you've:​

• Started a new job, or if you are self-employed.
• Stopped or are not working.
• Left the UK for more than three months.

They need this information to determine if you should be making payments. Without it, they might find it hard to understand your status.

It's worth noting that tens of thousands of graduates overpay on their student loans each year because their repayments are not stopped at the right time, or they keep paying after the loan is cleared. In 2023/24 alone, refunds for overpayments worth tens of millions went unclaimed. So staying on top of your repayment status isn't just administrative — it could save you money.

The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.