Student Loan Repayments in the UK: Plan 1, Plan 2, Plan 4, Plan 5 and Postgrad Explained

Student loan rules look complicated until you split them by plan. This guide explains which plan you are on, how repayments are taken through PAYE, what happens if you are self-employed or move abroad, how interest and write off periods work, and when voluntary repayments do or do not make sense.

This is a plain English overview for England, Wales, Scotland and Northern Ireland. Thresholds and rates are reviewed regularly. Always check your current figures in your Student Loans Company (SLC) or GOV.UK account before making decisions.

Which plan am I on

• Plan 1
  For most undergraduates who started courses before 2012 in England or Wales, and many Northern Ireland borrowers.
• Plan 2
  For most English and Welsh undergraduates who started from 2012 up to summer 2023.
• Plan 4
  For most Scottish undergraduates.
• Plan 5
  For new English borrowers on courses starting from 1 August 2023 onwards.
• Postgraduate Loan (PGL)
  For taught or research master’s and PhD borrowing. Can be held alongside Plan 1/2/4/5.

Your plan type is shown in your SLC account and usually printed on your payslip as part of your tax code information.

How repayments work through PAYE

• Repayments are taken automatically by your employer when your income over the plan’s yearly threshold is high enough.
• You repay a percentage of your income above the threshold, not the whole salary.
• Percentages differ by plan. Postgrad repayments are calculated separately and can be due on top of an undergrad plan.
• If your pay drops below the threshold, deductions pause automatically.
• You will see the deductions on your payslip under “Student Loan” and, if relevant, “Postgrad Loan”.

Example calculation (illustrative only)

• If your plan threshold were £27,000 and you earned £30,000, repayments would apply to £3,000 only.
• If the plan rate were 9 percent, the yearly repayment would be £270, taken monthly through payroll.
  Swap in your real plan threshold and percentage to estimate your figure.

Self-employed, multiple jobs, and irregular income

• Self-employed. Repayments are calculated via Self Assessment. HMRC uses your return to work out what is due across your plans.
• Multiple jobs. Payroll can under- or over-deduct if each job is below threshold. HMRC reconciles at year end. Keep payslips and check your SLC account.
• Refunds. If you paid when your annual income ended up below the threshold, you can request a refund from SLC after the tax year.

Interest and write off periods

• Interest. Each plan has its own rules, typically linked to inflation measures and sometimes to income. Interest adds to your balance but does not change your monthly deduction, which is set by income and plan rules.
• Write off.
  • Plan 1: balance usually written off after a set number of years from the April after you leave your course or at a certain age.
  • Plan 2: usually written off after 30 years.
  • Plan 4: similar long write-off period to Plan 1/2, but under Scottish rules.
  • Plan 5: designed to write off after 40 years.
  • Postgrad Loan: written off after a fixed period.
    If you expect to repay for most of the write-off term, the debt acts more like a time-limited graduate contribution than a traditional loan.

Plan 5 vs Plan 2 at a glance

• Plan 5 generally has a lower threshold and a longer write-off period. Monthly deductions may begin sooner, but the total you repay depends on your long-term income.
• Plan 2 has a higher threshold and a 30-year write-off.
  Neither plan charges repayments if your income sits below the threshold in a given period.

Postgraduate Loan alongside undergrad plans

If you have a Postgraduate Loan, you repay it in addition to any undergrad plan when your income is above the PGL threshold. Payroll lists them separately. It is normal to see both lines on your payslip if you have both types.

Moving abroad

• Tell SLC before you leave. If you work overseas, repayments are based on country-specific thresholds that reflect local earnings and cost of living.
• If you fail to provide income evidence, SLC may set a default monthly amount. Provide documents on time to avoid this.
• Keep your contact details and employment information updated to prevent arrears.

Overpayments and voluntary repayments

• Overpayments via PAYE. If you cleared the balance during a tax year but payroll kept deducting, contact SLC for a refund. You can also switch to Direct Debit in your last year to avoid overpaying through payroll.
• Voluntary repayments. Only consider if you are confident you will fully clear the balance well before the write-off date and your emergency fund and higher-interest debts are sorted. If your projected lifetime income suggests you will not clear the debt, extra voluntary payments often save little.

How to check what you will likely repay

1. Log in to your SLC or GOV.UK account and note your plan type(s), threshold(s), and current balance.
2. Use the official calculator to model repayments at different salaries.
3. Compare two scenarios: paying the default schedule vs adding voluntary amounts.
4. Prioritise building a 3 to 6 month emergency buffer and clearing high-interest debts before making extra student-loan payments.

Practical payslip checks each term

• Your plan type printed on the payslip matches your SLC plan
• Deductions only appear in months you cross the threshold
• Your employer started or stopped deductions when HMRC issued the correct notice
• Year-to-date totals on payslips match your SLC account view after payroll submissions

Common mistakes to avoid

• Ignoring the plan type and using the wrong threshold in your maths
• Making large voluntary payments while carrying expensive credit card or overdraft balances
• Forgetting to update SLC when moving abroad
• Not switching to Direct Debit in the final year, leading to payroll over-deductions

Student loan repayments are designed to move with your income. Focus first on your budget, emergency savings, and higher-interest debts. Once those are solid, use the official calculators with your real thresholds to decide whether extra repayments make sense for you. For many graduates, staying on the default schedule and letting the write-off do its job is the most efficient path.