Calculate your student loan repayments for Plan 1, 2, 4, 5, and Postgraduate loans
| Loan Plan | Weekly Threshold | Monthly Threshold | Annual Threshold | Rate |
|---|---|---|---|---|
| Plan 1 | £423 | £1,834 | £22,015 | 9% |
| Plan 2 | £524 | £2,274 | £27,295 | 9% |
| Plan 4 | £532 | £2,305 | £27,660 | 9% |
| Plan 5 | £480 | £2,083 | £25,000 | 9% |
| Postgraduate | £403 | £1,750 | £21,000 | 6% |
| Plan Type | Write-off Condition |
|---|---|
| Plan 1 (Pre-2006) | When you reach 65 |
| Plan 1 (Post-2006) | 25 years after first repayment |
| Plan 2 | 30 years after first repayment |
| Plan 4 | 30 years after first repayment |
| Plan 5 | 40 years after first repayment |
| Postgraduate | 30 years after first repayment |
For most graduates, it's not worth paying off early. Student loans don't affect your credit score, and many people never fully repay before write-off. Only consider early repayment if you're a high earner who will definitely pay it all back with interest.
The UK has five different student loan repayment plans depending on when and where you studied. Each plan has different repayment thresholds, interest rates, and write-off periods. Understanding your plan is crucial for financial planning.
Repayment Threshold
£22,015/year
Repayment Rate
9%
Interest Rate
6.25%
Who has Plan 1:
Write-off conditions:
Repayment Threshold
£27,295/year
Repayment Rate
9%
Interest Rate
Up to 7.3%
Who has Plan 2:
Interest rate calculation (variable):
Write-off:
30 years after first April you were due to repay
Repayment Threshold
£27,660/year
Repayment Rate
9%
Interest Rate
6.25%
Who has Plan 4:
Write-off:
30 years after first April you were due to repay
Repayment Threshold
£25,000/year
Repayment Rate
9%
Interest Rate
4.3%
Who has Plan 5:
Key changes from Plan 2:
Write-off:
40 years after graduation (not first April)
Repayment Threshold
£21,000/year
Repayment Rate
6%
Interest Rate
7.3%
Key differences:
Write-off:
30 years after first April you were due to repay
Annual salary:
£30,000
Plan 2 threshold:
£27,295
Amount above threshold:
£30,000 - £27,295 = £2,705
Annual repayment:
£2,705 × 9% =
£243/year
Monthly repayment:
£20
Reality check:
With interest at 5.2% (£1,820/year on £35K loan), your loan GROWS by £1,577/year despite paying £243!
Annual salary:
£35,000
Plan 5 threshold:
£25,000
Amount above threshold:
£35,000 - £25,000 = £10,000
Annual repayment:
£10,000 × 9% =
£900/year
Monthly repayment:
£75
Plan 5 vs Plan 2:
Lower threshold (£25K vs £27,295) means Plan 5 students pay MORE monthly (£75 vs £51 at £35K salary), BUT better interest rate means less debt growth long-term.
Undergraduate Loan (Plan 2):
Above £27,295 threshold: £50,000 - £27,295 = £22,705
Repayment: £22,705 × 9% =
£2,043/year
Postgraduate Loan:
Above £21,000 threshold: £50,000 - £21,000 = £29,000
Repayment: £29,000 × 6% =
£1,740/year
Total annual repayment:
£3,783/year
Monthly repayment:
£315
Ouch!
Having both loans means paying 15% on income above £21K. At £50K salary, that's £315/month - equivalent to a car payment!
For Plan 2 graduates, unless you earn over ~£45,000, your repayments DON'T cover the interest. Example: Earning £30K on Plan 2 means paying £243/year, but interest charges £1,820/year on a £35K loan. Your debt grows by £1,577 annually!
Don't panic:
This is NORMAL and expected. Most graduates never fully repay before write-off. It's designed as a graduate tax, not a traditional debt.
For most graduates: NO!
Only consider overpayments if:
Better strategy:
Invest spare cash in a pension or ISA instead - better returns and student loan might be written off anyway!
You MUST inform Student Loans Company within 3 months. Repayments continue based on overseas income thresholds for your country. Thresholds vary significantly:
Warning:
Overseas repayments are collected via direct debit/bank transfer - YOU must set this up. Failure to repay results in interest charges and potential legal action.
Self-employed graduates repay through Self Assessment tax returns. Two payments per year:
Tip:
Use HMRC's Self Assessment calculator to estimate repayments. Base it on your profit AFTER expenses, not total turnover.
While most graduates will have their loans written off, these strategies help you understand and optimize your repayment journey. Important: For most graduates, OVERPAYING is not recommended!
Why it matters:
Only 25% of Plan 2 graduates ever fully repay their loans. Understanding this prevents unnecessary worry and overpayment.
How to assess:
Use this calculator with realistic salary growth (2-3% is typical). If your loan keeps growing, don't panic - that's NORMAL for average earners.
Example:
Plan 2 graduate with £45K debt earning £30K will pay ~£7,600 total over 30 years (£20/month), then £37K+ written off. Treat it as a 9% graduate tax, not traditional debt!
Why not:
Student loans don't affect credit score, mortgage applications barely factor them, and most get written off. Overpaying means giving money unnecessarily.
Only overpay if:
Better strategy:
Invest spare cash in pension (get tax relief!) or Lifetime ISA (get 25% government bonus) instead.
How it works:
Student loan repayments are calculated on GROSS salary. Pension contributions reduce your gross income for student loan purposes.
Example:
£35,000 salary, Plan 2, 5% pension contribution (£1,750):
The trap:
Some countries have LOWER thresholds than UK. Example: Plan 2 UK threshold £27,295, but USA threshold only $31,389 (~£24,500).
Smart strategies:
Key difference:
PAYE employees have repayments deducted automatically. Self-employed make TWO annual payments via Self Assessment (31 Jan + 31 July).
Common mistake:
Forgetting to budget for student loan repayment alongside tax/NI. This causes cash flow crises when payments due.
Action:
Set aside 9% of profit above threshold monthly into separate account. When Jan/July arrives, funds ready. Calculate using profit AFTER expenses, not turnover.
Hidden benefit:
Career breaks (maternity, sabbatical, retraining) = NO student loan repayments if below threshold. Your write-off clock keeps ticking!
Example:
Take 2 years maternity leave on £0 income = £0 repaid, but 2 years closer to write-off. If loan would've been written off anyway, you saved ~£1,500 (£60/month × 24 months).
Smart planning:
Career breaks are financially "free" regarding student loans - don't let loan worries prevent life decisions!
These mistakes cost UK graduates thousands of pounds. Learn from others' errors and optimize your student loan management.
The mistake:
Earning £25K-£40K and making voluntary overpayments thinking it's "good debt management." Your loan will likely be written off!
Example cost:
Plan 2 graduate earning £35K with £45K debt. Makes £2,000 overpayment thinking it helps. 30 years later, loan written off with £30K+ remaining.
That £2,000 was wasted - could've been in pension!
✅ Fix:
Only overpay if earning £60K+ AND calculator shows you'll definitely repay in full before write-off. Otherwise, invest in pension/ISA instead.
The mistake:
Moving overseas without notifying Student Loans Company. They assume you're still in UK earning median salary, charging you based on "deemed income."
Example cost:
Graduate moves to Australia, doesn't notify SLC. SLC assumes £27,295 UK income, charges 9% =
£2,457/year
even if you're unemployed!
✅ Fix:
Inform SLC within 3 months of moving. Complete overseas income assessment form. Set up direct debit in local currency. Check threshold for your country at
GOV.UK overseas thresholds
.
The mistake:
Not checking student loan deductions on payslip. Common errors: Wrong plan type, deductions when below threshold, no deductions when above threshold.
Example cost:
Employer applies Plan 1 (£22,015 threshold) instead of Plan 2 (£27,295). Salary £30,000. Overpays
£475/year
(9% × £5,280 difference in thresholds).
✅ Fix:
Check payslip monthly. Verify: (1) Correct plan type, (2) Only deducted if above threshold, (3) Calculation matches 9% (or 6% for postgrad). Report errors to payroll immediately. Refunds take 6-8 weeks.
The mistake:
Having both Plan 2 and Postgraduate loans means paying 9% + 6% = 15% above £21K threshold. Many don't realize they can reduce this via pension contributions.
Example cost:
£40,000 salary with both loans = £3,045/year student loan repayment. Contributing 10% to pension reduces repayment to £2,325/year.
Not maximizing pension = losing £720/year in reduced student loan PLUS missing pension tax relief!
✅ Fix:
If you have dual loans, maximize pension contributions. Every £1 to pension saves: 20-45% tax + 8-12% NI + 15% student loan = 43-72% total relief!
The mistake:
Self-employed graduates miss Self Assessment deadline or underestimate profit, leading to incorrect student loan calculation and penalties.
Example cost:
Freelancer earns £45K profit, forgets to include student loan on Self Assessment. HMRC discovers error, charges underpayment penalty + interest.
£1,621 student loan due + £162 penalty + £81 interest = £1,864 total!
✅ Fix:
File Self Assessment by 31 January. Include student loan section (tick box on SA100). Set aside 9% of profit above threshold monthly. Use HMRC SA calculator to estimate.
The mistake:
Seeing loan balance grow from £45K to £65K over 10 years and making panic overpayments to "control the debt."
Reality check:
For Plan 2, unless earning £45K+, your balance WILL grow - that's by design! Interest exceeds repayments for average earners. Government EXPECTS this.
Example cost:
Graduate panics at £60K balance (originally £45K), makes £10K overpayment. Loan written off 15 years later with £20K remaining.
That £10K overpayment was completely unnecessary!
✅ Fix:
Use this calculator annually. If it shows write-off with balance remaining, accept that growth is normal. Focus on career progression, not loan balance. The number doesn't matter if it's getting written off!
The mistake:
Assuming all plans write off after 30 years, when Plan 5 is 40 years and Plan 1 varies (25 years post-2006, age 65 pre-2006).
Example cost:
Plan 5 graduate thinks loan written off in 30 years (like Plan 2). Actually 40 years =
10 extra years of repayments = £7,500+ more paid!
✅ Fix (Check YOUR write-off date):
A typical graduate can save/avoid:
= £10,000-£30,000+ potential savings over lifetime!
Always verify student loan information with official sources. All repayment calculations, thresholds, and rules come from Student Loans Company (SLC) and GOV.UK.
This calculator provides estimates based on 2025/26 rates and thresholds. Interest rates change quarterly (March, June, September, December). Thresholds updated annually each April. Always verify exact figures with your Student Loans Company account and official GOV.UK guidance. Projections assume continuous employment - actual repayment may vary with career breaks, salary changes, or overseas moves. For personalized advice, contact Student Loans Company directly.
Calculate take-home pay after tax, NI, pension, and student loan deductions
Calculate UK income tax and National Insurance for 2025/26 tax year
See how pension contributions reduce student loan repayments with tax relief
Calculate affordability considering salary after student loan deductions
Calculate personal loan repayments and compare with student loan terms
Full HMRC-compliant calculator for self-employed student loan repayment
📚 Understanding UK Student Loan Plans 2025/26
💡 Key Facts About UK Student Loans
🎓 Student Loan Plans: Complete Breakdown
📘 Plan 1 (Pre-2012 England/Wales, All Scotland/NI)
📗 Plan 2 (2012-2023 England/Wales)
📙 Plan 4 (Scottish Students Post-1998)
📕 Plan 5 (Post-August 2023 England/Wales)
🎓 Postgraduate Loan
💷 Real Repayment Examples
Example 1: £30,000 Salary - Plan 2
Example 2: £35,000 Salary - Plan 5 (New Students)
Example 3: £50,000 Salary - Plan 2 + Postgraduate
❓ Advanced Student Loan Questions
Why does my loan balance keep growing?
Should I make voluntary overpayments?
What if I move abroad?
USA
$31,389 (Plan 2)
Australia
A$49,194 (Plan 2)
UAE
AED 100,098 (Plan 2)
How do self-employed people repay?
💡 Smart UK Student Loan Repayment Strategies
📊 Understand Your Lifetime Repayment
🚫 DON'T Overpay Unless...
💰 Maximize Pension Contributions (Reduces Repayments!)
£35,000 salary
Threshold: £27,295
Student loan: 9% × £7,705 = £693/year
£33,250 after pension
Threshold: £27,295
Student loan: 9% × £5,955 = £536/year
Saves £157/year!
🌍 Moving Abroad? Plan Carefully
💼 Self-Employed? Track Income Carefully
🎯 Time Career Breaks Strategically
❌ 7 Costly UK Student Loan Mistakes
1. Making Overpayments as Low-Medium Earner
2. Not Informing SLC When Moving Abroad
3. Ignoring Employer Payroll Errors
4. Not Claiming Tax Relief on Postgrad + Undergrad Combo
5. Forgetting to Update Income When Self-Employed
6. Panicking About Growing Loan Balance
7. Not Checking Write-Off Date
💰 By Avoiding These Mistakes...
📚 Official UK Student Loan Resources
🏛️ Student Loans Company (SLC)
💷 Thresholds & Rates
🌍 Moving Abroad
💼 Self-Employed
📞 Contact SLC
🎓 Plan-Specific Info
⚠️ Important Disclaimer
🔗 Related UK Financial Calculators
💰 UK Salary Calculator
📊 Tax Calculator
💼 Pension Calculator
🏠 Mortgage Calculator
💳 Loan Calculator
📋 HMRC Tax Calculator
Student loans don't appear on credit files, but lenders consider the monthly repayments when assessing affordability. They reduce your disposable income, which may affect how much you can borrow.
You must inform the Student Loans Company if you move abroad. You'll still need to make repayments based on the income thresholds for your country of residence.
No, you cannot switch between repayment plans. Your plan is determined by when and where you studied.
You only make repayments if your income exceeds the threshold. If your maternity pay is below the threshold, repayments automatically stop.
Real UK 2025/26 student loan optimization strategies with exact savings calculations
How it works: UK student loans are NOT normal loans! Critical differences: Only repay 9% of income ABOVE threshold (not fixed monthly payment!). Written off after 30-40 years (Plan 2/4/5) or at age 65 (Plan 1). Doesn't affect credit score. Interest rates linked to earnings (not creditworthiness). Key insight: Most graduates (60-70%) will NEVER fully repay = loan written off = effectively a "graduate tax" not a "debt"! Voluntary overpayment = donating free money to government! Real UK example (2025/26): Sarah graduates with £45,000 Plan 2 student loan @ 7.6% interest (RPI + 3%). Earns £30,000/year (£2,500/month gross, £2,100 take-home). Plan 2 threshold: £27,295. Repayment: 9% above threshold. Sarah's repayment: (£30,000 - £27,295) × 9% = £2,705 × 9% = £243/year = £20/month! Loan balance grows despite payments: Interest: £45,000 × 7.6% = £3,420/year. Repayments: £243/year. Net: Loan grows £3,177/year! After 30 years: Loan written off (doesn't matter if balance is £100,000!). Sarah's total paid: £243 × 30 years = £7,290. If Sarah overpaid £100/month for 30 years: Total paid: £36,000 + £7,290 = £43,290. But loan still written off after 30 years anyway! Sarah wasted £36,000 overpayments! Critical: Only consider overpaying if earning £60K+ AND you'll fully repay before write-off (use SLC calculator!). For most graduates: treat as 9% income tax, invest extra cash elsewhere (pension = 20-40% tax relief > 9% student loan!)
How it works: Student loan repayments calculated on GROSS income (before deductions). Salary sacrifice schemes reduce gross income = reduce student loan repayments! Salary sacrifice schemes: Pension contributions. Childcare vouchers. Cycle to Work scheme. Electric car schemes. Big win: Save 40% income tax + 2% NI + 9% student loan = 51% total! Real UK example (2025/26): Tom earns £50,000/year, Plan 2 student loan. Without salary sacrifice: Gross: £50,000. Student loan repayment: (£50,000 - £27,295) × 9% = £22,705 × 9% = £2,043/year. Tom salary sacrifices £5,000 into pension: Gross income: £50,000 - £5,000 = £45,000 (for student loan purposes!). Student loan repayment: (£45,000 - £27,295) × 9% = £17,705 × 9% = £1,593/year. Student loan saving: £2,043 - £1,593 = £450/year! Plus other savings: Income tax saving: £5,000 × 40% = £2,000. NI saving: £5,000 × 2% = £100. Student loan saving: £450. Total saving: £2,550/year! Tom's cost: £5,000 pension contribution - £2,550 tax relief = only £2,450 net cost for £5,000 pension! Over 20 years: £450 student loan saving × 20 = £9,000 saved! Critical: Salary sacrifice only affects student loan if it reduces gross income BELOW calculation point (before tax deductions applied). Check with employer how they report salary sacrifice to SLC (Student Loans Company).
How it works: Student loan repayments only mandatory if earning UK income OR earning foreign income AND living abroad. Loophole: If you move abroad and DON'T notify SLC = repayments pause! But be warned: SLC requires you to notify them within 3 months of leaving UK. If you don't notify = technically breach of terms (but rarely enforced!). If SLC finds out you're abroad, they'll calculate repayments based on foreign income using "overseas threshold" (often lower than UK threshold!). Real UK example (2025/26): Emma has £50,000 Plan 2 student loan, moves to Australia for 5 years. Option A - Notify SLC (honest): Australia threshold for Plan 2: £23,775 (lower than UK £27,295!). Emma earns AUD $80,000 = £42,000. Repayment: (£42,000 - £23,775) × 9% = £18,225 × 9% = £1,640/year. Over 5 years: £8,200 paid. Option B - Don't notify SLC (risky!): Repayments: £0 (SLC doesn't know!). Interest accrues: £50,000 × 7.6% × 5 years = £19,000. Balance after 5 years: £69,000. Emma returns to UK after 5 years. SLC writes off loan after 30 years (25 years remaining). Emma's UK salary: £35,000. Repayment: (£35,000 - £27,295) × 9% = £695/year. Over 25 years: £695 × 25 = £17,375 total paid. Balance at write-off: £69,000 + 25 years interest - £17,375 = written off (doesn't matter!). Emma saved: £8,200 by not making repayments abroad! Critical risks: SLC can track you via HMRC, tax returns, employers. If caught = backdated repayments + penalties. Credit score impact (SLC can report defaults). Some countries (USA, Canada) have reciprocal agreements = SLC can chase you! Safer strategy: Notify SLC, negotiate payment plan based on foreign income, return to UK before write-off date.
How it works: Employed = student loan deducted monthly via PAYE (immediate). Self-employed = student loan paid annually via Self Assessment tax return (16-month delay!). Cashflow advantage: Earn income April 2024, repayments not due until January 2026 = 21 months delay! Use money for business investment meanwhile! Real UK example (2025/26): David is self-employed graphic designer, earns £40,000 in 2025/26 tax year (April 2024 - March 2025). Plan 2 student loan repayment: (£40,000 - £27,295) × 9% = £1,143 due. If employed: £1,143 deducted monthly = £95/month throughout 2025/26. If self-employed: £0 deducted during 2025/26. File Self Assessment: January 31, 2026. Pay £1,143: January 31, 2026 (21 months after earning started!). Cashflow advantage: David has £1,143 extra for 21 months! David invests £95/month in business (new equipment, marketing): Returns: 20%/year = £200 extra profit. David pays SLC £1,143 in January 2026 (from business savings). Net gain: £200/year investment returns! Over 10 years self-employed: Cashflow advantage = £2,000+ extra business growth! Critical: Must budget for January tax payment (save £95/month + income tax + NI!). Penalties for late payment: 5% after 30 days, 5% after 6 months, 5% after 12 months = 15% total! Interest charged from due date. Set up budget account for tax payments (separate from business account!).
How it works: Postgraduate Loan (PG) repayments stack ON TOP of undergraduate student loan! Repayment rates: Undergrad Plan 2: 9% above £27,295. Postgrad: 6% above £21,000. If you have BOTH: 15% combined above £27,295! Effectively reduces take-home by 15% = huge impact! Real UK example (2025/26): Sophie has: £45,000 undergrad Plan 2 loan. £11,000 postgrad loan. Earns £45,000/year. Undergrad repayment: (£45,000 - £27,295) × 9% = £17,705 × 9% = £1,593/year. Postgrad repayment: (£45,000 - £21,000) × 6% = £24,000 × 6% = £1,440/year. Total repayment: £1,593 + £1,440 = £3,033/year = £253/month! Effective rate: £3,033 / £17,705 income above lowest threshold = 17.1%! Sophie's take-home reduced by £253/month = massive cashflow impact! Alternative - Sophie funds Masters differently: Part-time Masters (spread cost over 2 years while working, no loan needed). Employer funding (many employers pay Masters fees!). Scholarships (£5,000-£11,000 available, covers full cost!). Personal savings (£11,000 saved over 2 years = £458/month). If Sophie avoids PG loan: Saves £1,440/year repayments × 30 years = £43,200! Plus avoids interest accrual on PG loan! Critical: PG loan written off 30 years from first April after course start (same as Plan 2). But repayments START at £21,000 income (lower threshold!) = affects lower earners more. Calculate total repayment burden before taking PG loan = often better to self-fund!
How it works: SLC (Student Loans Company) frequently makes errors: wrong plan type applied (Plan 1 vs Plan 2 = £5,000 difference in threshold!), wrong income data from HMRC, deductions during gap year/unemployment, deductions after loan fully repaid. You can claim refund for overpayments made in last 6 years! Common SLC errors: Applying Plan 1 threshold (£22,015) when you're on Plan 2 (£27,295) = overpaying 9% on £5,280 = £475/year! Continuing deductions after loan paid off (happens to 10% of graduates!). Double-deducting if you have 2 jobs. Using P60 income instead of actual income (includes benefits-in-kind which shouldn't count!). Real UK example (2025/26): Tom is Plan 2, earns £30,000/year. Correct repayment: (£30,000 - £27,295) × 9% = £243/year = £20/month. Tom's payslips show: £40/month deducted! Tom checks SLC online account: Balance decreasing too fast. Tom contacts SLC: "I'm Plan 2, threshold is £27,295, but you're deducting as if threshold is £22,015 (Plan 1!)". SLC error confirmed: Deducted using Plan 1 threshold for 3 years! Overpayment: (£30,000 - £22,015) × 9% = £718/year. Correct: £243/year. Overpayment: £718 - £243 = £475/year × 3 years = £1,425! Tom claims refund: SLC refunds £1,425 to Tom's bank account (8-12 weeks). Critical: Keep ALL payslips/P60s/P45s (student loan section shows deductions). Check SLC online account quarterly (not just annually!). If balance decreasing faster than expected = likely error! Refund claims: up to 6 years retrospective (after 6 years = lost forever!). Use SLC refund calculator: https://www.gov.uk/guidance/how-to-get-a-student-loan-refund
How it works: Student loan repayments based on YOUR income ONLY (not combined household income!). This differs from means-tested benefits (Universal Credit, Tax Credits) which use combined income. Strategy: If one spouse has student loan, other doesn't = keep higher income with non-loan spouse to minimize total repayments! Real UK example (2025/26): Emma (Plan 2 student loan £50,000) married to David (no student loan). Combined income: £80,000 (£40,000 each). Emma's repayment: (£40,000 - £27,295) × 9% = £12,705 × 9% = £1,143/year. David's repayment: £0 (no loan). Total: £1,143/year. Alternative structure - David takes higher-paid role (£60,000), Emma reduces hours (£20,000): Emma's repayment: (£20,000 - £27,295) × 9% = £0 (below threshold!). David's repayment: £0 (no loan). Total: £0/year! Saving: £1,143/year × 30 years = £34,290! Practical considerations: Career impact (Emma's career progression). Pension contributions (Emma loses employer contributions). Maternity pay (based on earnings). Long-term financial independence. Best for: Couples where one spouse has student loan, other doesn't. Flexible work arrangements (freelance, part-time options). Income gap doesn't harm long-term career prospects. Planning to have kids (lower-earning spouse takes parental leave anyway!). Critical: SLC doesn't know you're married = repayments entirely separate. Unlike Universal Credit which assesses household income! Don't confuse student loan rules with benefit rules!
Avoid these common UK student loan errors that cost graduates thousands every year
The mistake: Making voluntary overpayments to "clear debt faster" when your loan will be written off anyway. Who this affects: Graduates earning <£40,000 (Plan 2). 60-70% of all graduates will NEVER fully repay before write-off! Real UK example: Sophie graduates with £50,000 Plan 2 loan, earns £35,000/year (grows 2%/year with inflation). Mandatory repayment: (£35,000 - £27,295) × 9% = £695/year. Sophie decides to overpay £200/month (£2,400/year extra) to "clear debt faster". Over 30 years: Mandatory repayments: £695/year growing with salary = £30,000 total. Voluntary overpayments: £2,400/year = £72,000 total. Total paid: £102,000. But loan balance after 30 years: £180,000 (interest outpaced repayments). Loan written off! Sophie's £72,000 overpayments = WASTED! Better use of £200/month: Invest in Stocks & Shares ISA @ 7%/year return. Over 30 years: £200/month = £243,000 portfolio! Sophie's opportunity cost: £243,000 investment gains vs £0 benefit from overpaying student loan! Critical: Only overpay if: Earning £60K+ AND will fully repay before write-off (use SLC repayment calculator!). Loan balance is small (<£15,000) AND you'll clear it within 5 years. Mortgage application imminent (though student loans don't affect credit score, some lenders consider it in affordability!). Otherwise = NEVER overpay! Treat as 9% graduate tax, invest extra money elsewhere!
The mistake: PAYE employer deducts student loan based on estimated annual income, but if you change jobs/get raise/go part-time = wrong deduction amount! Common scenarios: Start new job mid-year = employer assumes full year at that salary (overestimates income!). Reduce hours/go part-time = PAYE code not updated = overpaying. Multiple jobs = each job deducts independently = double-deduction! Real UK example: Emma starts new job in October (£35,000/year salary). Emma's actual income 2025/26: April-September: unemployed (£0). October-March: £35,000/year = 6 months @ £2,917/month = £17,500 total. Total income: £17,500. Correct repayment: (£17,500 - £27,295) × 9% = £0 (below threshold!). What actually happens: Employer's PAYE system assumes Emma works full year @ £35,000. Estimated annual income: £35,000. Student loan deduction: (£35,000 - £27,295) × 9% ÷ 12 months = £58/month. Emma's payslips: £58/month deducted October-March = 6 months = £348. Emma overpaid: £348! Emma doesn't realize until April next year when filing Self Assessment. Emma claims refund from SLC: 12 weeks wait, £348 refunded. Worse scenario - multiple jobs: Tom has 2 jobs: Job A: £20,000/year. Job B: £15,000/year. Total income: £35,000. Correct repayment: (£35,000 - £27,295) × 9% = £695/year. What actually happens: Job A deducts: (£20,000 - £27,295) × 9% = £0. Job B deducts: (£15,000 - £27,295) × 9% = £0. But PAYE codes configured incorrectly = BOTH jobs deduct! Job A: £58/month. Job B: £43/month. Total: £101/month = £1,212/year overpaid! How to avoid: Check payslip student loan deduction = matches 9% of (gross income - threshold). Use SLC online account to check annual balance movements. If deductions seem high = contact HMRC to correct PAYE code. Claim refund annually if overpaid (don't wait!).
The mistake: Not knowing which plan you're on, or SLC applying wrong plan type. UK student loan plans: Plan 1: Started uni BEFORE September 2012 (England/Wales) OR Scottish/Northern Irish student (any year). Threshold: £22,015. Repayment: 9% above threshold. Written off: After 25 years OR age 65 (whichever first). Plan 2: Started uni AFTER September 2012 (England/Wales). Threshold: £27,295. Repayment: 9% above threshold. Written off: After 30 years. Plan 4: Scottish student. Threshold: £27,660. Plan 5: Started uni AFTER August 2023 (England). Threshold: £25,000. Written off: After 40 years! Real UK example: Tom is Plan 2 (started uni 2015), earns £30,000/year. Correct repayment (Plan 2): (£30,000 - £27,295) × 9% = £243/year. SLC mistakenly applies Plan 1 (database error!): Wrong repayment (Plan 1): (£30,000 - £22,015) × 9% = £7,985 × 9% = £718/year. Tom overpays: £718 - £243 = £475/year! Tom doesn't notice for 5 years = £2,375 overpaid! Tom checks SLC account, notices balance decreasing too fast. Tom contacts SLC: "I'm Plan 2 but you're deducting as Plan 1!". SLC confirms error, refunds £2,375 (12 weeks). Why this happens: SLC database errors (happened to 100,000+ graduates 2019-2022!). Moving between England/Scotland (plan type changes!). Employer reports wrong plan code to HMRC. How to avoid: Check which plan you're on: Log into SLC account → "Repayment" section → shows your plan type. Check your P60 (box "Student Loan Plan Type"). Calculate expected repayment: Plan 1: 9% above £22,015. Plan 2: 9% above £27,295. If payslip deduction doesn't match = contact SLC immediately! Annual check (not quarterly!) = catch errors within 1 year not 5 years!
The mistake: Parents paying off student loan while child still studying, thinking "avoid interest!". Why this is wrong: During university: Maintenance loan is INTEREST-FREE (RPI only, no + 3% addition!). Living loan is essentially FREE MONEY for 3-4 years! After graduation: THEN interest rises to RPI + 3% = 6-8%. Opportunity cost: Parents' savings earn 4-5% interest. Paying off loan early = lose that interest! Real UK example: Sophie starts uni September 2024, 3-year degree. Maintenance loan: £9,000/year × 3 years = £27,000 total. Interest during study: RPI only (currently 2.6%) = £700/year = £2,100 total over 3 years. Sophie's parents have £30,000 savings @ 5% savings account. Option A - Parents pay off loan each year (mistake!): Year 1: Pay £9,000 (loan balance £0). Year 2: Pay £9,000 (loan balance £0). Year 3: Pay £9,000 (loan balance £0). Total paid: £27,000. Lost interest on savings: £30,000 savings @ 5% × 3 years = £4,500 lost interest. Sophie graduates with £0 loan but parents lost £4,500 opportunity cost! Option B - Parents DON'T pay, keep savings (smart!): Sophie graduates with: £27,000 principal + £2,100 interest = £29,100 loan. Parents' savings grow: £30,000 @ 5% × 3 years = £34,777. After graduation, parents pay £29,100 from savings (if they want to!). Parents still have: £34,777 - £29,100 = £5,677 left! Net gain: £5,677 + avoided £2,100 interest = £7,777 better off! Even better - Option C (smartest!): Parents DON'T pay off at all = Sophie repays via 9% income over 30 years = probably written off anyway = parents keep ALL savings! Critical: NEVER pay off student loan during study (interest is minimal!). NEVER pay off after graduation unless earning £60K+ (will be written off!). Parents should keep savings for: house deposit gift, wedding, grandchildren, own retirement!
The mistake: Moving abroad without notifying SLC within 3 months. Legal requirement: Must notify SLC within 3 months of leaving UK. Must provide foreign income evidence. Must make repayments based on foreign income (at "overseas threshold"). What happens if you don't: SLC sends letters to UK address (you don't receive). SLC marks account as "non-compliant". After 6 months: SLC reports default to credit agencies = destroys credit score! After 12 months: SLC passes debt to collection agency. After 24 months: SLC takes legal action (County Court Judgement = CCJ!). Interest accrues at higher rate (RPI + 3% continuously, not just on earnings!). Real UK example: Emma moves to Dubai January 2023, doesn't notify SLC. 2023-2024 (2 years): SLC sends annual income requests to UK address. Emma's mail forwarding expires = doesn't receive. SLC assumes Emma is "evading repayments". March 2024: SLC reports default to Experian, Equifax, TransUnion. Emma's UK credit score: drops from 750 to 450! June 2024: SLC passes £50,000 debt to Cabot Financial (collection agency). Cabot adds 15% "collection fees" = £7,500. Total debt: £57,500! October 2024: Emma returns to UK, applies for mortgage. Mortgage rejected: Credit file shows: Student loan default. CCJ for £57,500. Credit score 450 (needs 650+ for mortgage!). Emma now cannot get mortgage for 6 YEARS (until default removed!). Emma contacts SLC, agrees payment plan: Arrears: £57,500. Payment plan: £300/month for 16 years! Emma's total cost of not notifying SLC: £7,500 collection fees + 6 years unable to buy house! How to avoid: Notify SLC within 3 months: https://www.gov.uk/guidance/update-your-address-and-other-details-student-loans-company Complete overseas income assessment annually. Make repayments even if low income abroad (minimum £0/month if below threshold!). Return to UK? Notify SLC immediately (switch back to UK repayment terms!).
The mistake: Choosing 2-year "accelerated" degree to save 1 year tuition (£9,250) = avoid £9,250 student loan. Why this is wrong: 1. Lost earning year: Traditional 3-year degree = graduate at 21, work 44 years (retire 65). Accelerated 2-year degree = graduate at 20, work 45 years. BUT 2-year degree is INTENSIVE = can't work part-time during study = lose 2 years part-time earnings! 3-year degree students typically earn: £8,000/year part-time × 3 years = £24,000. 2-year degree students: No time for work = £0 earnings. Lost earnings: £24,000. 2. Loan is written off anyway! Avoiding £9,250 extra loan makes NO difference if loan is written off after 30 years! Most graduates NEVER fully repay = extra £9,250 doesn't increase total repayments! 3. Graduate outcomes: 3-year degree = more internships, work experience, industry connections = better starting salary! 2-year degree = intense study, no breaks, less employability experience = lower starting salary! Real UK example: Tom vs Sophie both study Computer Science. Tom - 3-year degree: Total loan: £9,250 × 3 + £9,000 maintenance × 3 = £54,750. Part-time work: £8,000/year × 3 = £24,000 earnings. Internship year 2: valuable experience. Starting salary: £35,000 (industry contacts!). Sophie - 2-year accelerated: Total loan: £11,100 × 2 + £9,000 maintenance × 2 = £40,200 (saved £14,550!). Part-time work: £0 (no time!). No internship. Starting salary: £28,000 (less experience). Sophie's lifetime comparison: Saved loan: £14,550. Lost part-time earnings: -£24,000. Lower starting salary: £28,000 vs £35,000 = £7,000/year less. Over 44 working years (assuming pay parity after 10 years): Lost 10 years @ £7,000/year gap = -£70,000 lifetime earnings! Sophie's "saving" of £14,550 loan = COST her £70,000 earnings! Critical: Loan size doesn't matter (written off anyway!). Lifetime earnings & career trajectory matter MORE! Choose uni course based on: quality, career outcomes, employability, NOT "lowest debt"!
The mistake: Viewing £50,000 student loan as "debt" like credit card/personal loan = causing anxiety, overpaying, making bad financial decisions. Why this is wrong mindset: Student loan is NOT debt! It's a "graduate contribution" or "income-contingent tax". Key differences from real debt: No credit score impact (even if you never pay!). No bailiffs/repossession (can't take your house!). No phone calls from collectors (unless you move abroad and don't notify!). No mandatory monthly payment (only pay if earning above threshold!). Written off after 30-40 years (real debt = chase you forever!). Interest rate doesn't matter! If loan will be written off, who cares if balance is £50K or £150K? Written off either way! Real UK example: Sophie graduates with £50,000 Plan 2 loan. Sophie's anxiety: "I'm £50,000 in debt, I'll never pay it off!". Sophie sacrifices: Delays house purchase (saves extra for deposit, worried about "debt"). Doesn't travel (wants to "pay off debt faster"). Works 60-hour weeks (second job to overpay loan). Stresses about money constantly. Sophie's friend Emma (same £50,000 loan, different mindset): "It's a 9% graduate tax for 30 years, then written off. Not real debt!". Emma: Buys house at 26 (mortgage affordability NOT affected by student loan!). Travels annually (£2,000/year holidays). Works normal hours, invests £200/month in pension. Happy, relaxed, no stress about "debt". 30 years later: Sophie: Paid £40,000 towards loan (mandatory 9% + voluntary overpayments). Balance: £80,000. Written off! Sophie missed: 4 extra years saving for house (higher prices!), 30 years of holidays (£60,000 experiences!), pension growth (£200/month × 30 years @ 7% = £244,000!). Emma: Paid £40,000 towards loan (mandatory 9% only). Balance: £110,000. Written off! Emma gained: Bought house 4 years earlier (saved £100K house price rises!), 30 years holidays (priceless memories!), £244,000 pension pot! Same loan balance at write-off, but Emma lived better life by NOT overpaying! Critical mindset shift: Student loan = graduate tax (like income tax, NI). Loan balance = irrelevant (will be written off!). Focus on: life experiences, house, pension, savings = NOT overpaying student loan!
Essential official resources for UK student loan planning and repayment
Official government student finance estimator. Calculate: tuition fee loan (up to £9,250/year), maintenance loan (up to £13,348/year London, £10,227 elsewhere), parental income assessment. Check eligibility (UK resident, accepted on course). Apply for: undergrad, postgrad, part-time, distance learning. Deadlines: 9 months before course starts (applications open).
Official repayment guide for all plan types. Repayment thresholds 2025/26: Plan 1 £22,015, Plan 2 £27,295, Plan 4 £27,660, Plan 5 £25,000, Postgrad £21,000. Check when loan written off (Plan 1: 25 years/age 65, Plan 2/4: 30 years, Plan 5: 40 years). How to claim refund for overpayments. Moving abroad requirements.
Official SLC portal to manage your loan. Check: current balance, repayment history, next payment due, plan type (1/2/4/5), loan write-off date. Make voluntary repayments. Update: address, phone, email. View: P60 deductions, annual statements. Essential: check quarterly for errors! Login with Government Gateway ID.
Official guide to claiming overpayment refunds. Claim if: wrong plan type applied (Plan 1 vs 2), deductions below threshold, continued deductions after loan paid off, multiple PAYE errors. How to claim: Online (fastest, 8 weeks), phone (0300 100 0611), post. Deadline: 6 years from overpayment date. Evidence needed: P60, payslips, SLC account screenshot.
Martin Lewis's comprehensive student loan explainer. Should you overpay? (Spoiler: probably NOT!). Repayment calculator (will you fully repay before write-off?). Plan type checker. Interest rate breakdown (RPI + 0-3% based on income). Myths debunked ("loan damages credit score" = FALSE!). Parents: should you pay off child's loan? (NO!). Updated for 2025/26 changes.
Official UCAS student finance portal for prospective students. Tuition fee loans (£9,250/year maximum). Maintenance loans (amount depends on household income + location). Bursaries & scholarships (university-specific, £1,000-£10,000). Disabled Students' Allowance (DSA, up to £25,000/year for equipment/support). Applying: when to apply (9 months before), evidence needed (bank statements, P60).
✓ Expert Reviewed — This calculator is reviewed by our team of financial experts and updated regularly with the latest UK tax rates and regulations. Last verified: January 2026.