Student loans have opened doors for millions across the UK to pursue higher education without financial barriers. Yet, many graduates find the repayment system complicated, with different plans, income thresholds, and changing interest rates.
Understanding when repayments begin, how much you’ll owe, and how your circumstances affect these payments can make managing your post-graduate finances far easier.
This detailed guide explains the earning thresholds, repayment rules, and examples for each plan so you can take control of your student loan journey.
When Do Student Loan Repayments Start in the UK?
You won’t begin repaying your student loan immediately after university. Repayments only start once your income rises above a specific threshold, which is determined by the type of loan plan you’re on.
These thresholds are reviewed every April to align with inflation and the cost of living. For example, graduates under Plan 2 start repaying only once they earn over £28,470 per year, while those on Plan 4 (Scotland) won’t pay anything until their income exceeds £32,745 annually.
Several factors influence when you begin repaying:
- The type of loan plan assigned to you (Plan 1, 2, 4, 5, or Postgraduate)
- The kind of loan you took (undergraduate or postgraduate)
- Your gross income, including bonuses, overtime, and commissions
- Your employment type, whether PAYE, self-employed, or overseas
If your earnings fall below the repayment threshold, your repayments stop automatically until your income rises again. This ensures that repayments stay proportionate to your financial situation.
Understanding the Different Student Loan Plans
The UK’s student loan system operates under several plans, each with its own repayment threshold, interest rate, and write-off period. The plan you’re placed on depends on when and where you studied.
| Plan Type | Annual Threshold | Repayment Rate | Typical Interest Rate |
|---|---|---|---|
| Plan 1 | £26,065 | 9% of income over threshold | 3.2% |
| Plan 2 | £28,470 | 9% of income over threshold | 3.2%–6.2% (income-based) |
| Plan 4 (Scotland) | £32,745 | 9% of income over threshold | 3.2% |
| Plan 5 | £25,000 | 9% of income over threshold | 3.2% |
| Postgraduate | £21,000 | 6% of income over threshold | 6.2% |
For Plan 2 loans, the interest rate increases gradually with income, starting at 3.2% and reaching up to 6.2% for those earning above £51,245.
Each plan has a specific purpose:
- Plan 1: For students who began courses before September 2012 in England or Wales.
- Plan 2: For those who started courses after September 2012 in England or Wales.
- Plan 4: For Scottish students whose loans are managed by the Student Awards Agency Scotland (SAAS).
- Plan 5: For English students who started university from August 2023 (repayments start in 2026).
- Postgraduate Loan: For students who took out a Master’s or Doctoral loan.
How Much Do You Have to Earn to Pay Back Student Loan?
In the UK, you start repaying your student loan only once your income rises above a specific annual threshold, which depends on the repayment plan you’re on.
Each plan has its own income limit, and you only repay a percentage of the amount you earn above that threshold not your total income.
For example, under Plan 2, which covers most English and Welsh students who started university after 2012, you begin repayments once you earn more than £28,470 a year (around £2,372 per month).
If you’re on Plan 1, the threshold is £26,065 annually, while for Plan 4 (used by Scottish students) it’s £32,745 a year. Those with Postgraduate Loans start repaying at a lower threshold of £21,000 a year.
Once your earnings exceed your plan’s limit, you’ll repay 9% (for undergraduate loans) or 6% (for postgraduate loans) of the income above the threshold.
For instance, someone earning £30,000 a year on Plan 2 pays 9% of the difference between £30,000 and £28,470, which equals £137.70 annually or around £11.50 per month.
If your income falls below the threshold at any time, repayments automatically stop until your earnings increase again. This ensures the system remains fair, flexible, and in line with your financial situation.
How Are Monthly Student Loan Repayments Calculated?
Repayments are based on how much you earn over your plan’s threshold. The system is designed so you only pay when you can afford it, the higher your income, the more you repay.
Let’s look at examples showing how monthly repayments differ depending on income and loan plan.
| Plan | Monthly Salary | Threshold | Income Over Threshold | Monthly Repayment |
|---|---|---|---|---|
| Plan 1 | £2,750 | £2,172 | £578 | £52.02 |
| Plan 2 | £2,500 | £2,372 | £128 | £11.52 |
| Plan 4 | £3,000 | £2,728 | £272 | £24.48 |
Example 1 – Oliver (Plan 1)
Oliver works as a project coordinator in Manchester and earns £2,750 per month before tax. The Plan 1 threshold is £2,172 per month, meaning he repays 9% on the amount above that:
£2,750 – £2,172 = £578 → £52.02 per month.
Example 2 – Peppy (Plan 2)
Peppy earns £2,500 monthly as a software tester. Her Plan 2 threshold is £2,372. She pays 9% of the excess:
£2,500 – £2,372 = £128 → £11.52 per month.
Example 3 – Liam (Plan 4)
Liam, a nurse from Glasgow, earns £3,000 a month. The Plan 4 threshold is £2,728, so he pays:
£3,000 – £2,728 = £272 → £24.48 per month.
Your repayments will automatically adjust if your salary fluctuates. If you earn below the threshold for a while, deductions will stop until your income rises again.
What If You Have Multiple Student Loans?
Some graduates have more than one student loan, such as a Plan 2 undergraduate loan and a Postgraduate Loan. In this case, both are repaid simultaneously, with each applied to the relevant portion of income.
Example – Amelia Has Plan 2 and a Postgraduate Loan:
Amelia earns £2,400 per month. She repays:
- 9% of income above £2,372 (Plan 2 threshold)
- 6% of income above £1,750 (Postgraduate threshold)
For Amelia:
- £2,400 – £2,372 = £28 → £2.52 on Plan 2
- £2,400 – £1,750 = £650 → £39 on Postgraduate Loan
Total repayment: £41.52 per month
Both deductions are taken automatically via payroll. If you have two undergraduate loans, you only repay 9% over the lowest threshold, not twice.
How Employment Type Affects Student Loan Repayments?
Your repayment method depends largely on whether you’re employed or self-employed.
If you’re employed (PAYE): Repayments are automatically deducted from your wages, just like tax or National Insurance. Your employer handles everything, so there’s no need to make manual payments.
If you’re self-employed: You report your income through the Self Assessment system, and HMRC calculates what you owe based on your declared earnings.
Example – Hannah (Self-Employed)
Hannah is a freelance designer earning £35,000 a year on Plan 2. Her repayment is based on income above £28,470:
£35,000 – £28,470 = £6,530 → 9% = £587.70 annually, or about £49/month.
Example – Jacob (Two Part-Time Jobs)
Jacob earns £1,200 from one job and £1,000 from another. Since neither income exceeds the monthly Plan 1 threshold (£2,172), no repayments are deducted, even though his total income is £2,200.
This system ensures repayments are taken only when each job independently crosses the threshold.
What Happens If You Move Abroad?
If you relocate overseas after graduation, you’re still expected to repay your student loan, but the process works differently.
Before leaving, you must inform the Student Loans Company (SLC) and provide evidence of your overseas income. If you don’t, the SLC may place you on a default repayment plan with fixed monthly charges, often higher than what you’d normally pay.
Your repayment threshold is adjusted according to your country’s cost of living, based on World Bank data. For example, if you move to a country with lower living costs, your threshold will be reduced to ensure fairness.
Once assessed, you’ll make repayments directly to the SLC in your local currency, typically on a monthly basis.
What Are the Current Student Loan Interest Rates in 2025?
Interest begins accumulating from the day your first loan payment is made. The rate varies depending on your plan, and for Plan 2 loans, your income.
| Plan | Interest Rate (2025) |
|---|---|
| Plan 1 | 3.2% |
| Plan 2 | 3.2% to 6.2% (income-based) |
| Plan 4 | 3.2% |
| Plan 5 | 3.2% |
| Postgraduate | 6.2% |
For Plan 2:
- £28,470 or less → 3.2%
- £28,471–£51,245 → between 3.2% and 6.2%
- Above £51,245 → 6.2%
Although interest affects the overall size of your loan, it doesn’t change how much you pay each month, only how quickly your debt grows over time.
Can You Repay Early or Request a Refund?
Yes, you can make voluntary repayments at any time, in full or partially, without penalties. However, early repayment isn’t always beneficial.
If your earnings are likely to remain below the threshold or your loan will be written off before it’s fully paid, early repayment may not save you money.
The system is designed so that many borrowers never repay the full balance before it’s written off after 30 or 40 years, depending on the plan.
Refunds can be requested in two cases:
- If your employer deducted repayments when your earnings were below the threshold.
- If the SLC overcharged due to an administrative error.
You can check your repayment records and balance by logging into your online SLC account.
Final Thoughts
Understanding how much you need to earn before repaying your student loan gives you a clearer view of your financial future. The UK’s income-based system ensures that repayments remain fair and affordable, only beginning when your salary reaches the required level.
Whether you’re managing multiple loans, considering work abroad, or exploring early repayments, staying informed about the rules and thresholds will help you stay in control.
For the latest figures, repayment details, or personal estimates, visit the Student Loans Company (SLC) or the official UK Government Student Finance website.
Frequently Asked Questions
Does a student loan affect my credit score?
No, it doesn’t appear on your credit report. However, lenders may factor your repayments into affordability assessments.
Will it impact my mortgage application?
Yes, indirectly, your disposable income is slightly reduced by loan repayments, which may affect the amount you can borrow.
What if I go on maternity leave or take a career break?
Repayments stop automatically when your income drops below the threshold, with no penalties or extra interest.
Can I switch my loan plan?
No. Your repayment plan is assigned based on when and where you studied. You can, however, make voluntary repayments anytime.
Are benefits or pensions included in repayment calculations?
Only taxable income counts toward your repayment amount. Disability and certain state benefits are excluded.
What if I’m overcharged by the SLC?
You can request a refund by contacting the Student Loans Company and providing your payslips or tax records.
Can my loan ever be written off?
Yes. Depending on your plan, any remaining balance is written off after 30 or 40 years, or earlier if you become permanently unable to work.