Student Loan Repayment Changes 2025-26: New Thresholds, Rates & Calculation Guide

Last Updated: 18 March 2026 | Tax Year: 2025-26

Got a student loan? You're paying it back whether you like it or not—and the rules just changed. Again. Here's what's different for 2025-26, which plan you're on, and exactly how much you'll be paying back on your salary.

Quick Summary

• Current thresholds and rates for Plan 1, 2, 4, 5, and Postgraduate loans.
• How repayments are calculated through PAYE and when they start.
• How to check your plan and estimate your annual repayments.

What's Changed in 2025-26

Plan 2 Loans: Threshold now £28,470 Plan 5 Loans: PAYE deductions can start from 6 April 2026 at the earliest, with a 40-year write-off Interest Rates: RPI-based rates updated for Sep 2025–Aug 2026 (Plan 2 ranges from 3.2% to 6.2% depending on income) Plan 1 & 4: Thresholds increased to £26,065 (Plan 1) and £32,745 (Plan 4) Postgraduate: Threshold remains £21,000 and the rate stays 6%

If you started university between 1 September 2012 and 31 July 2023 in England, or from September 2012 in Wales, you're probably on Plan 2. That's still the most common one.

Which Plan Am I On?

Your plan depends on when and where you studied. It's not optional—you don't get to choose.

Plan 1: Started before September 2012 (England/Wales) or before 1998 (Scotland/Northern Ireland) Plan 2: Started September 2012+ in England/Wales Plan 4: Started 1998+ in Scotland Plan 5: Applied to Student Finance England and started on or after 1 August 2023 Postgraduate: Master's/PhD loans from 2016+

Check your loan details on the Student Loans Company website if you're not sure. Seriously—it matters.

Plan 2 Student Loans (Most Common)

This covers most English and Welsh students who started university from September 2012 onwards. If you graduated in the last decade, this is probably you.

2025-26 Plan 2 Details

Repayment Threshold: £28,470 annually (£2,372 monthly, £547 weekly) Repayment Rate: 9% on income above threshold Interest Rate: RPI to RPI + 3% depending on income (3.2%–6.2% for Sep 2025–Aug 2026) Write-off Period: 30 years after the April you first become eligible to repay

Plan 2 Salary Examples

Earn less than £28,470? You pay nothing. Earn more? You pay 9% on everything above that threshold.

£25,000 Salary

• Income above threshold: £0 (below £28,470)
• Monthly repayment: £0
• Annual repayment: £0

You're in the clear.

£30,000 Salary

• Income above threshold: £1,530
• Monthly repayment: £11.48
• Annual repayment: £138

Barely noticeable. A coffee and a sandwich per week.

£35,000 Salary

• Income above threshold: £6,530
• Monthly repayment: £48.98
• Annual repayment: £588

Starting to feel it, but not painful.

£50,000 Salary

• Income above threshold: £21,530
• Monthly repayment: £161.48
• Annual repayment: £1,938

Now it's real money.

£75,000 Salary

• Income above threshold: £46,530
• Monthly repayment: £348.98
• Annual repayment: £4,188

This hurts.

Plan 1 Student Loans (Pre-2012)

If you started before September 2012 in England/Wales, or anytime in Scotland/Northern Ireland before Plan 4 came in, you're on Plan 1.

2025-26 Plan 1 Details

Repayment Threshold: £26,065 annually (£2,172 monthly, £501 weekly) Repayment Rate: 9% on income above threshold Interest Rate: Lower of RPI or Bank of England base rate + 1% (set annually) Write-off Period: Usually 25 years after the April you first become eligible to repay; loans taken out before 1 September 2006 are written off at age 65

Plan 1 vs Plan 2 Comparison

Here's where it gets messy. Plan 1 has a lower threshold, so you start paying sooner, but it also has lower interest rates and earlier write-off rules.

£40,000 Salary Example:

Plan 1 Repayment:

• Income above £26,065: £13,935
• Annual repayment: £1,254
• Monthly repayment: £104.51

Plan 2 Repayment:

• Income above £28,470: £11,530
• Annual repayment: £1,038
• Monthly repayment: £86.48

Plan 1 pays about £216 more per year because the threshold's lower. That's about £18 more per month.

Plan 4 Student Loans (Scotland)

Scottish students who started from 1998 onwards get Plan 4. It replaces Plan 1 in Scotland.

2025-26 Plan 4 Details

Repayment Threshold: £32,745 annually (£2,728 monthly, £629 weekly) Repayment Rate: 9% on income above threshold Interest Rate: RPI (Retail Price Index), set annually Write-off Period: 30 years after the April you first become eligible to repay (or age 65/30 years if your first loan was before 1 August 2007)

Plan 4 Advantages

Plan 4's actually decent. Higher threshold than Plan 2 (£32,745 vs £28,470), and interest rates linked to RPI.

£35,000 Salary - Plan 4:

• Income above £32,745: £2,255
• Annual repayment: £203
• Monthly repayment: £16.91

Compare that to £588 annually for Plan 2. Not a huge difference, but it's something.

Plan 5 Student Loans (2023+ Starters)

Applied to Student Finance England and started on or after 1 August 2023? Welcome to Plan 5. Different rules again.

2025-26 Plan 5 Details

Repayment Threshold: £25,000 annually (£2,083 monthly, £480 weekly) Repayment Rate: 9% on income above threshold Interest Rate: RPI only (no additional charges) Write-off Period: 40 years after the April you first become eligible to repay

Key Plan 5 Changes

Plan 5 has a lower threshold—£25,000 vs £28,470 for Plan 2—so you start paying sooner. PAYE deductions start from 6 April 2026 at the earliest, and only once you have become due to repay.

£30,000 Salary - Plan 5:

• Income above £25,000: £5,000
• Annual repayment: £450
• Monthly repayment: £37.50

£60,000 Salary - Plan 5:

• Income above £25,000: £35,000
• Annual repayment: £3,150
• Monthly repayment: £262.50

Plan 5 vs Plan 2 (High-Level)

Plan 5 graduates typically repay more over time because of the lower threshold and longer 40-year write-off period. The exact difference depends on your earnings profile.

Postgraduate Student Loans

Got a Master's or PhD loan? Different rules entirely.

2025-26 Postgraduate Details

Repayment Threshold: £21,000 annually (£1,750 monthly, £403 weekly) Repayment Rate: 6% on income above threshold Interest Rate: RPI + 3% (subject to cap) Write-off Period: 30 years after the April you first become eligible to repay

Multiple Loan Repayments

Here's where it gets brutal. If you've got both undergraduate and postgraduate loans, you pay both. At the same time.

• Undergraduate rate: 9% on income above undergraduate threshold
• Additional postgraduate rate: 6% on income above £21,000

£50,000 Salary with Plan 2 + Postgraduate:

Plan 2 Calculation:

• £50,000 - £28,470 = £21,530
• Plan 2 repayment: £21,530 × 9% = £1,938

Postgraduate Calculation:

• £50,000 - £21,000 = £29,000
• Postgraduate repayment: £29,000 × 6% = £1,740

Total Annual Repayment: £3,678 (£306.50 per month)

On top of tax and National Insurance. Earn £50k, take home significantly less.

Interest Rate Changes 2025-26

Current Interest Rate Structure

Plan 1 & 4: RPI-based rates set annually

Plan 2: RPI to RPI + 3% depending on income (3.2%–6.2% for Sep 2025–Aug 2026)

Plan 5: RPI only

Postgraduate: RPI + 3%

Interest Rate Caps

The government can cap interest rates so they don’t exceed prevailing market rates. Caps can change year to year—check the latest Student Loans Company updates if you’re unsure.

Salary Sacrifice and Student Loans

How Salary Sacrifice Affects Repayments

Student loan repayments are calculated on the gross pay used for PAYE. Salary sacrifice can reduce that, but standard pension contributions often don’t.

Pension Contributions: Reduce tax/NI; only salary sacrifice pensions reduce student loan repayments Other Benefits: Check the scheme rules—some reduce student loan calculations, others don’t

Example - £40,000 salary with £2,000 pension contribution (non-salary-sacrifice):

Without Pension:

• Gross pay: £40,000
• Above Plan 2 threshold: £11,530
• Student loan: £1,038 annually

With £2,000 Pension:

• Gross pay: £40,000
• Student loan calculation: Still on £40,000
• Student loan: £1,038 annually (unchanged)
• But saves tax/NI on the £2,000

Student loans are calculated on your PAYE gross pay. Only salary sacrifice reduces that figure.

Regional Variations

Scottish Graduates Working in England

• Loan Plan: Remains Plan 4 (Scottish rates and thresholds)
• Income Tax: Pay English rates if English tax resident
• Student Loan: Calculate on gross salary using Plan 4 rules

Your loan plan doesn't change just because you move. Scottish grad? Plan 4 forever.

English Graduates Working in Scotland

• Loan Plan: Remains Plan 2 (English rates and thresholds)
• Income Tax: Pay Scottish rates if Scottish tax resident
• Student Loan: Calculate on gross salary using Plan 2 rules

Same deal. English grad? Plan 2 for life.

Tax Integration Example

English graduate, £50,000 salary, working in Scotland:

Scottish Income Tax: £9,014 National Insurance: £2,994 Plan 2 Student Loan: £1,938 Total Deductions: £13,946 Take-Home: £36,054

Use our calculator to see exact breakdowns for your situation.

Planning and Optimization Strategies

Early Repayment Considerations

Should you pay off your student loan early? Generally, no. Here's why:

• Loans are written off after 25-40 years depending on your plan
• For many borrowers, the write-off date matters more than the headline interest rate
• Opportunity cost—you could invest that money elsewhere
• Protection if your income drops

Consider early repayment if:

• You're a very high earner likely to repay in full anyway
• You want the psychological benefit of being debt-free
• Interest rates exceed your investment returns

For many borrowers, overpaying is poor value. Make the required repayments and let the plan's write-off terms do the work.

Career and Salary Planning

Threshold Awareness: Understanding how salary increases affect repayments matters.

• Just below threshold: Small pay rises have no impact
• Just above threshold: Sudden 9% marginal rate kicks in
• High earners: Effective marginal rates can exceed 50% (tax + NI + student loans)

Earn £60k on Plan 2 with a postgraduate loan (rUK)? Your marginal rate is:

• 40% income tax (higher rate)
• 2% National Insurance
• 9% undergraduate loan
• 6% postgraduate loan

That's 57% on every extra pound you earn. Brutal.

Professional Advice

Seek advice for:

• Multiple loan types
• Complex employment situations (contracting, self-employment)
• International tax considerations
• Early repayment decisions

Using Our Student Loan Calculator

Our comprehensive tax and student loan calculator includes:

• All loan plan types (Plans 1, 2, 4, 5, and Postgraduate)
• Real-time calculations with 2025-26 rates and thresholds
• Combined tax and loan calculations
• Scottish tax integration for Scottish residents
• Multiple loan scenarios for postgraduate borrowers
• Annual and monthly repayment breakdowns

Plug in your salary, select your plan, and see exactly what you'll pay.

Key Changes Summary

What's New for 2025-26

1. Plan 5 repayments: Can start from 6 April 2026 at the earliest, with a 40-year write-off
2. Interest rates updated: Plan 2 still ranges from RPI to RPI + 3%, with rates set for Sep 2025–Aug 2026
3. Threshold updates: Plan 1 £26,065; Plan 2 £28,470; Plan 4 £32,745; Plan 5 £25,000; Postgraduate £21,000
4. Inflation protection: Interest rate caps can apply when market rates are lower

Long-term Trends

• Threshold freezes: Real-terms reduction in repayment thresholds over time
• Interest rate volatility: High inflation affects all plans
• Plan complexity: Different rules for different cohorts
• Political changes: Potential reforms under future governments

Tools & Calculators

• Calculate your take-home pay
• Explore all tax tools

Frequently Asked Questions

When do I stop paying?

• Plan 1: 25 years after the April you first become eligible to repay (or age 65 for loans before 1 September 2006)
• Plan 2: 30 years after the April you first become eligible to repay
• Plan 4: Usually 30 years after the April you first become eligible to repay (older loans can be written off at age 65)
• Plan 5: 40 years after the April you first become eligible to repay
• Postgraduate: 30 years after the April you first become eligible to repay
• All plans: When balance reaches £0

What if I move abroad?

You still owe repayments based on worldwide income. You must notify SLC of overseas employment. Different thresholds may apply (often lower). Enforcement is possible through international agreements.

Don't think moving to Australia lets you off the hook. They'll find you.

Can I pay extra?

Yes, but it's generally not recommended for most borrowers. No early repayment penalties exist, but consider the opportunity cost vs other investments. This is more of a psychological vs financial decision.

Getting Professional Help

Consider professional advice if you have:

• Multiple types of student loans
• Complex employment (contracting, self-employment)
• International income or residence
• Very high income levels
• Questions about early repayment

Next Steps

1. Check your loan plan on the Student Loans Company website
2. Calculate your repayments using our tax calculator
3. Understand your payslip deductions
4. Plan career moves with student loan impact in mind
5. Keep records of all payments for future reference

Ready to calculate your exact student loan repayments? Use our comprehensive UK Tax and Student Loan Calculator to see:

• Exact monthly and annual repayments for your salary
• Combined impact of tax, National Insurance, and student loans
• Comparisons between different salary levels
• Scottish vs English tax implications
• Multiple loan calculations for postgraduate borrowers

Understanding your student loan obligations helps with financial planning, career decisions, and budgeting. The system's complex, but knowing your specific situation means better financial decision-making throughout your career.

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