Student Loan Repayments and Take Home Pay
A student loan can cut hundreds of pounds a year from your take home pay. Here are the 2026/27 repayment thresholds for every plan, and how to work out your own deduction.
For millions of UK workers, the third deduction on the payslip is the student loan. It is easy to forget when you use a take home pay calculator, then wonder why your first pay packet is lighter than expected. A student loan repayment is taken from your salary before you receive it, just like tax, and it applies even while the loan balance itself keeps growing with interest. This guide covers the 2026/27 thresholds and shows exactly how repayments change your take home pay.
How student loan repayment works
You repay a percentage of what you earn above a set threshold. The percentage depends on your plan: 9% for Plan 1, Plan 2, Plan 4 and Plan 5 loans, and 6% for postgraduate loans. Earn below your threshold and you repay nothing that pay period. Earn above it and 9% of the slice above the threshold goes to the Student Loans Company. Your employer handles it through payroll, so it simply appears as a deduction next to income tax and National Insurance.
The 2026/27 repayment thresholds
Which threshold applies depends on when and where you studied. Plan 1 covers older English and Welsh loans and all Scottish and Northern Irish borrowers. Plan 2 covers English and Welsh students who started after September 2012. Plan 4 is Scotland only for newer borrowers, and Plan 5 covers the newest English borrowers.
| Plan | Yearly threshold | Monthly threshold | Rate |
|---|---|---|---|
| Plan 1 | £26,900 | £2,241 | 9% |
| Plan 2 | £29,385 | £2,448 | 9% |
| Plan 4 | £33,795 | £2,816 | 9% |
| Plan 5 | £25,000 | £2,083 | 9% |
| Postgraduate loan | £21,000 | £1,750 | 6% |
What happens if your pay changes
Repayments are worked out each time you are paid, not once for the year. If a bonus or overtime pushes one month’s pay over your threshold, a deduction is taken that month even if your yearly salary sits below it. The reverse is also true: if your annual income ends up below the yearly threshold, you can ask for a refund of what was taken. Your employer only looks at the pay in front of them, never your whole year.
Worked example: Plan 2 repayment on £35,000
On a £35,000 salary with a Plan 2 loan, your earnings above the £29,385 threshold are £5,615. Nine percent of that is £505.35 a year, or £42.11 a month. That £42.11 comes straight off your take home pay, on top of income tax and National Insurance. Our £35,000 after tax page shows the full breakdown with and without the loan.
Why the plan matters so much
The same £35,000 salary gives very different repayments by plan. On Plan 1 the bill is £729 a year, on Plan 2 it is £505.35, and on Plan 4 just £108.45, because the thresholds differ. If you are unsure which plan you are on, check an old student finance letter or your online repayment account before estimating your take home pay.
If you have more than one plan
Some borrowers hold two plans, for example an old Plan 1 loan plus a newer Plan 2 loan. You do not pay twice. Instead, you repay 9% of your income over the lowest threshold of the plans you hold, in this case the Plan 1 threshold of £26,900. There is a single deduction each payday, which is then split between the loans. Your payslip shows it as one line, so nothing looks different on your end.
What it does to your take home pay
A student loan repayment works like an extra slice of tax on the part of your salary above the threshold. Unlike income tax, though, the debt is eventually written off if unpaid, after 25 to 40 years depending on your plan. The repayment itself does not depend on how much you owe. Two graduates with the same salary and plan pay the same monthly amount even if one borrowed twice as much. To see your own numbers, use the UK salary calculator and choose your plan.
Common questions
£505.35 a year, or £42.11 a month. You repay 9% of the £5,615 above the £29,385 Plan 2 threshold.
No. Repayments are tied to your pay, not your employer. Your new employer takes them through payroll the same way, as long as your pay is above your plan threshold.
You repay both at once: 9% over your main plan threshold plus 6% over the £21,000 postgraduate threshold. The two deductions are taken together from your pay.
The lower one. You repay 9% of income over the £26,900 Plan 1 threshold, with a single deduction each payday split between the two loans.
Related guides:
UK income tax
National Insurance
How we calculate