UK finance jargon - in plain English
A government loan to cover university costs, repaid only once your earnings pass a threshold.
UK student loans are not like personal loans from a bank. You only repay once your income passes a threshold, repayments are taken automatically through PAYE, and any remaining balance is written off after a set number of years. For Plan 2, that is 30 years from the April after you left your course. For Plan 5 (those starting from 2023 onwards), it is 40 years. For 2026/27, the Plan 2 repayment threshold is £29,385. Above that, you repay 9% of whatever you earn over the threshold. If your income drops below the threshold, repayments stop automatically. Interest on Plan 2 is income-linked: while studying and for the first few months after, it is RPI plus 3%. After that it tapers between RPI (for incomes at or below the repayment threshold) and RPI plus 3% (for higher incomes), with the exact rate depending on where your income sits within that range.
You earn £35,000 on Plan 2. Your repayment threshold is £29,385, so you repay 9% of £5,615, which is around £505 per year (£42/month). This comes out of your payslip automatically. You do not repay 9% of your total salary, only the portion above the threshold.
Student loan plans vary depending on when and where you studied. Plan 1, Plan 2, Plan 4, Plan 5, and Postgraduate loans all have different thresholds and rules. Check gov.uk/repaying-your-student-loan for your specific plan.
Last updated: June 2026. Sources: HMRC / GOV.UK / Student Finance England / FCA where relevant.
People treat student debt like a mortgage and make large overpayments to clear it faster. For many people on Plan 2, the balance will be written off before they repay it in full. Overpaying benefits the government, not you, in that scenario. Check the numbers for your specific situation first.
This is an estimate for a single student loan plan. Repayments are 9% of income above the threshold for Plans 1, 2, 4 and 5, and 6% for Postgraduate loans. Actual repayments can differ if you are paid weekly/monthly, receive bonuses, have more than one job, are self-employed, or repay more than one loan plan. Based on 2026/27 thresholds. If your salary is below the threshold your repayment is £0. Check gov.uk/repaying-your-student-loan for your exact plan details.
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