Student Loan Plan 1
The earliest student loan repayment plan, applicable to UK students who took out their first loan before 1 September 2012. Repayments are 9% of income above the Plan 1 threshold (£26,900 for 2026/27) and are deducted automatically through PAYE for employees. The interest rate is the lower of the Bank of England base rate plus 1% or the Retail Price Index, and the loan is written off at age 65 or 25 years after becoming due, whichever comes first.
How it works
If you're an employee, Plan 1 repayments are deducted automatically by your employer through PAYE, calculated each pay period rather than on your annual income as a whole. This means your repayment can fluctuate month to month if your pay is irregular, and a one-off bonus in a single pay period can trigger a repayment even if your annual income wouldn't otherwise cross the threshold. Self-employed borrowers instead calculate and pay their Plan 1 repayment through Self Assessment, based on their full year's profits.
Because Plan 1 predates the later plans, most people still repaying it are further into their careers and closer to the point where their loan is either cleared through repayments or written off. The Student Loans Company tracks your balance and notifies HMRC once the write-off date is reached, at which point PAYE deductions stop automatically — you don't need to apply for the write-off yourself.
A common source of confusion is having both a Plan 1 loan and a Postgraduate Loan running at the same time, which happens if you completed an undergraduate degree before September 2012 and later returned for a taught master's or doctorate. In that case you repay both simultaneously, deducted as separate lines on your payslip.
Example: Plan 1 repayment on a £32,900 salary
With the Plan 1 threshold at £26,900 for 2026/27, a salary of £32,900 sits £6,000 above the threshold. Repayments are charged at 9% of the amount above the threshold, so the annual repayment is £6,000 × 9% = £540, or £45 a month if spread evenly through PAYE.
If the same borrower's salary were £26,900 exactly, at the threshold, no repayment would be due at all — the 9% rate only bites on income above the line, not on the whole salary.
Frequently asked questions
How do I find out which student loan plan I'm on?
Your plan type depends on where you studied and when you started your course; check your annual statement from the Student Loans Company (SLC) or your online account, which states the plan clearly rather than leaving it to guesswork.
Does my Plan 1 interest rate change over time?
Yes — Plan 1 interest is set as the lower of the Bank of England base rate plus 1% or the Retail Price Index, so it moves as those benchmarks change rather than staying fixed for the life of the loan.
What happens if I stop working — does my Plan 1 loan still grow?
Interest keeps accruing on the outstanding balance whether or not you're earning, but repayments only happen through PAYE or Self Assessment when your income is above the threshold, so a period out of work pauses repayments without pausing interest.
Related Terms
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).
Repayment Threshold
The level of annual income above which you must start making student loan repayments, which differs depending on your loan plan.
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.
Try the calculator
Use our free tool to see how student loan plan 1 affects your tax.