Repayment Threshold
The level of annual income above which you must start making student loan repayments, which differs depending on your loan plan. For 2026/27, the thresholds are: Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000, and Postgraduate Loan £21,000. Repayments are calculated as a percentage (9% for plans 1–5) of earnings above the relevant threshold.
How it works
Which threshold applies to you depends on your loan plan, which in turn depends on when and where you started your course — Student Finance confirms your plan when the loan is set up and communicates it to HMRC so your payroll deducts against the correct figure automatically.
For employees, repayments are calculated through PAYE each pay period based on that period's earnings, while self-employed borrowers have their repayment calculated once a year through Self Assessment based on annual profits — this can smooth out or change the result compared to fluctuating monthly PAYE deductions.
Student loan repayments are deducted after tax and National Insurance, and unlike a pension contribution, they don't reduce your taxable income — they're simply a separate percentage-based deduction calculated on income above the threshold.
Example: Plan 2 repayments on a £35,000 salary
Income above the Plan 2 threshold of £29,385 is £35,000 − £29,385 = £5,615.
The repayment is 9% of that excess: £5,615 × 9% = £505.35 for the year.
Spread across the year through payroll, that's roughly £42 deducted each month.
Frequently asked questions
How do I know which repayment threshold applies to me?
It depends on when and where you started your course; Student Finance confirms your plan type when your loan is issued and this is passed to HMRC so your employer deducts against the right threshold.
What happens if my income drops below the threshold?
No repayments are due, and PAYE deductions stop automatically; if you're on Self Assessment instead, your annual calculation is still based on your total income for the year.
Do all plans use the same repayment percentage?
Plans 1 through 5 all use 9% of income above their own threshold, while the Postgraduate Loan uses a separate 6% rate, so combined borrowers can see two different percentages applied.
Related Terms
Student Loan Plan 1
The earliest student loan repayment plan, applicable to UK students who took out their first loan before 1 September 2012.
Student Loan Plan 2
The repayment plan for students who started an undergraduate course in England or Wales from 1 September 2012 onwards.
Student Loan Plan 4
The repayment plan for Scottish students who took out their first student loan on or after 1 September 1998 under the Student Awards Agency for Scotland.
Student Loan Plan 5
The newest undergraduate repayment plan, applying to students starting courses in England from 1 August 2023 onwards.
Postgraduate Loan
A student loan available to UK residents studying a postgraduate master's or doctoral course, repaid through payroll deductions at 6% of income above the postgraduate repayment threshold (£21,000 per year).
SLC
The Student Loans Company — the government-owned company that administers student loans in the UK, including issuing funds to students, collecting repayments through payroll (via HMRC), and managing loan balances.
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Use our free tool to see how repayment threshold affects your tax.