UK student loans behave more like an extra graduate tax than traditional debt. Your loan balance does not impact your credit score, repayments come straight out of your salary via PAYE, and any remaining balance is cancelled after 30 to 40 years. Here is how Plan 1, 2, 4, 5, and Postgraduate loan deductions compare for 2026/27.
Confirmed 2026/27 Student Loan Thresholds
- Plan 1: £26,900 per year (£2,241.66/month) · 9% repayment rate.
- Plan 2: £29,385 per year (£2,448.75/month) · 9% repayment rate.
- Plan 4 (Scotland): £33,795 per year (£2,816.25/month) · 9% repayment rate.
- Plan 5 (English starters post-Aug 2023): £25,000 per year (£2,083.33/month) · 9% repayment rate.
- Postgraduate Loan: £21,000 per year (£1,750.00/month) · 6% repayment rate.
1. Student Loan Plan Comparison by Start Date and Country (2026/27)
The student loan plan you belong to depends on which UK country funded your studies, the calendar year you commenced your higher education course, and the level of qualification.
| Plan | Eligible Students & Start Dates | Annual Threshold | Rate Above Threshold | Write-off Period |
|---|---|---|---|---|
| Plan 1 | England/Wales (1998 to 31 Aug 2011) or Northern Ireland (all undergraduate) | £26,900 | 9% | 25 years after graduation or age 65 |
| Plan 2 | England & Wales undergraduate courses started 1 Sept 2011 to 31 July 2023 | £29,385 | 9% | 30 years after April following course finish |
| Plan 4 | Scottish undergraduate and postgraduate students funded by SAAS | £33,795 | 9% | 30 years after April following graduation or age 65 |
| Plan 5 | English undergraduate students starting courses on or after 1 August 2023 | £25,000 | 9% | 40 years after April following course finish |
| Postgrad | Master’s and Doctoral loans in England & Wales | £21,000 | 6% | 30 years after April following course finish |
2. Concurrent Undergrad and Postgrad Repayments
If you hold both an undergraduate loan and a Postgraduate loan from Student Finance England or Wales, HMRC deducts repayments for both schemes concurrently.
For example, if you earn £35,000 on a Plan 2 loan and also have a Postgraduate loan:
- Plan 2 Deduction: (£35,000 – £29,385) × 0.09 = £5,615 × 0.09 = £505.35/yr (£42.11/mo).
- Postgraduate Deduction: (£35,000 – £21,000) × 0.06 = £14,000 × 0.06 = £840.00/yr (£70.00/mo).
- Total Student Finance Deductions: £505.35 + £840.00 = £1,345.35/yr (£112.11/mo).
3. Should You Overpay Your Student Loan?
Because UK student loans are cancelled after statutory periods (30 years for Plan 2/Postgraduate and 40 years for Plan 5) regardless of outstanding principal, many graduates will never pay off their loan balance in full before it is written off. Voluntary overpayments do not reduce your mandatory monthly PAYE deductions, making overpayment disadvantageous for all except consistent upper-decile lifetime earners.
Statutory References
- GOV.UK: Repaying your student loan — rates, thresholds and bands
- GOV.UK: Which student loan repayment plan are you on
- The Education (Student Loans) (Repayment) Regulations 2009 (as amended)