Student Loan Repayment UK: Everything You Need to Know

There are several repayment plans depending on when and where you studied. Plan 1 (England/Wales pre-2012, Scotland, NI): repay 9% of income above £24,990/year. Written off after 25 years. Plan 2 (England/Wales 2012-2023): repay 9% of income above £27,295/year. Written off after 30 years. Plan 4 (Scotland from 1998): repay 9% of income above £31,395/year. Written off after 30 years. Plan 5 (England from 2023): repay 9% of income above £25,000/year. Written off after 40 years. Postgraduate loans: repay 6% of income above £21,000/year, on top of any undergraduate repayments.

Repayments are taken automatically through your payslip (via PAYE) if you're employed, or through Self Assessment if you're self-employed. You only repay when you earn above the threshold — and only on the amount above it. Example: on Plan 2, earning £35,000, you repay 9% of £7,705 (£35,000 - £27,295) = £693/year or about £58/month. If your income drops below the threshold — due to job loss, career break, or reduced hours — repayments stop automatically. This income-based repayment is what makes student loans fundamentally different from commercial debt.

Student loan interest rates vary by plan. Plan 2 charges RPI + up to 3% while you're earning above the threshold, which means your balance can grow even while you're making repayments. This causes anxiety, but it's important to understand: the balance is largely irrelevant for most borrowers. What matters is how much you repay each month (determined by your income) and whether the balance is written off before you clear it. For the majority of Plan 2 graduates (estimated 70-80%), the loan will be written off with balance remaining — so the balance growing doesn't cost them anything.

For most graduates: no. If your loan will be written off before you repay it in full (which applies to the majority), any voluntary overpayments are effectively wasted money — you'd have paid the same total amount without them. The only graduates who should consider overpaying are those on high incomes who will definitely repay in full before the write-off date, and Plan 1 borrowers with relatively small remaining balances and low interest rates. Use the Student Loan Calculator on MoneySavingExpert to estimate your total repayments under different scenarios before making any extra payments.

Your student loan does NOT appear on your credit report and does NOT affect your credit score. However, mortgage lenders do consider it when assessing affordability — because it reduces your disposable income. The write-off is NOT taxable — when your remaining balance is written off, you don't owe anything on it. Repayments continue even after you've paid more than you borrowed — interest means you might repay £60,000 on a £40,000 loan, and that's the system working as designed. If you leave the UK, you still owe the loan — SLC will contact you to set up repayments based on your overseas income.

If your loan has been repaid in full through PAYE but your employer continues deducting payments, contact SLC for a refund — this happens more often than you'd think, because there's a lag between your final payment and SLC updating their records. You can also contact SLC if you believe your repayments have been incorrectly calculated. Keep an eye on your Student Loan account online (repayment.slc.co.uk) to track your balance and repayment history.