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.

What's Changed in 2025-26

Plan 2 Loans: Threshold stays at £27,295 (most graduates) Plan 5 Loans: 30-year forgiveness period (down from 40 years—this is huge) Interest Rates: Still capped during high inflation Plan 1 & 4: Minor threshold adjustments Postgraduate: Unchanged threshold and rates

If you started uni between 2012-2023 in England or Wales, you're probably on Plan 2. That's 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: Started September 2023+ in England/Wales 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: £27,295 annually (£2,274 monthly, £525 weekly) Repayment Rate: 9% on income above threshold Interest Rate: RPI + 0-3% (currently capped at 7.3%) Forgiveness Period: 30 years from first repayment

Plan 2 Salary Examples

Earn less than £27,295? You pay nothing. Earn more? You pay 9% on everything above that threshold.

£25,000 Salary

Income above threshold: £0 (below £27,295)
Monthly repayment: £0
Annual repayment: £0

You're in the clear.

£30,000 Salary

Income above threshold: £2,705
Monthly repayment: £20.29
Annual repayment: £243

Barely noticeable. A coffee and a sandwich per week.

£35,000 Salary

Income above threshold: £7,705
Monthly repayment: £57.79
Annual repayment: £693

Starting to feel it, but not painful.

£50,000 Salary

Income above threshold: £22,705
Monthly repayment: £170.29
Annual repayment: £2,043

Now it's real money.

£75,000 Salary

Income above threshold: £47,705
Monthly repayment: £357.79
Annual repayment: £4,293

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: £22,015 annually (£1,834 monthly, £423 weekly) Repayment Rate: 9% on income above threshold Interest Rate: Lower of RPI or Bank of England base rate + 1% Forgiveness Period: 25 years from first repayment OR 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 lower interest rates and earlier forgiveness.

£40,000 Salary Example:

Plan 1 Repayment:

Income above £22,015: £17,985
Annual repayment: £1,619
Monthly repayment: £135

Plan 2 Repayment:

Income above £27,295: £12,705
Annual repayment: £1,143
Monthly repayment: £95

Plan 1 pays £476 more per year because the threshold's lower. That's £40 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: £27,660 annually (£2,305 monthly, £532 weekly) Repayment Rate: 9% on income above threshold Interest Rate: RPI (Retail Price Index) Forgiveness Period: 30 years from first repayment

Plan 4 Advantages

Plan 4's actually decent. Higher threshold than Plan 2 (£27,660 vs £27,295), and lower interest rates—just RPI, no additional charges.

£35,000 Salary - Plan 4:

Income above £27,660: £7,340
Annual repayment: £661
Monthly repayment: £55

Compare that to £693 annually for Plan 2. Not a huge difference, but it's something.

Plan 5 Student Loans (2023+ Starters)

Started in September 2023 or later? Welcome to Plan 5. Different rules again.

2025-26 Plan 5 Details

Repayment Threshold: £25,000 annually (£2,083 monthly, £481 weekly) Repayment Rate: 9% on income above threshold Interest Rate: RPI only (no additional charges) Forgiveness Period: 30 years (reduced from 40 years)

Key Plan 5 Changes

The forgiveness period dropping from 40 to 30 years is massive. That's a decade less of payments hanging over you.

But the threshold's lower—£25,000 vs £27,295 for Plan 2. You start paying sooner.

£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 Lifetime Comparison

Let's say you start on £45,000 with 3% annual increases.

Plan 2 (30-year forgiveness at £27,295):

Total repayments: ~£47,000
Loan forgiven: ~£23,000

Plan 5 (30-year forgiveness at £25,000):

Total repayments: ~£52,000
Loan forgiven: ~£18,000

Plan 5 graduates typically repay more because of the lower threshold. You're paying for longer before forgiveness kicks in.

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, £404 weekly) Repayment Rate: 6% on income above threshold Interest Rate: RPI + 3% (capped during high inflation) Forgiveness Period: 30 years from first repayment

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 - £27,295 = £22,705
Plan 2 repayment: £22,705 × 9% = £2,043

Postgraduate Calculation:

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

Total Annual Repayment: £3,783 (£315 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: Lower of RPI or Bank of England base rate + 1%

Currently around 3-4%
Most favorable rates

Plan 2 & 5: RPI only (simplified from previous structure)

No longer varies by income level
Currently capped at 7.3%

Postgraduate: RPI + 3%

Highest interest rates
Currently capped at 7.3%

Interest Rate Caps

The government caps interest rates to prevent excessive charges during high inflation. This particularly benefits Plan 2 borrowers (who'd previously pay RPI + 3%) and postgraduate borrowers.

Without the cap? Some people would be paying 9-10% interest. With it? 7.3%. Still high, but better.

Salary Sacrifice and Student Loans

How Salary Sacrifice Affects Repayments

Student loan repayments are calculated on gross pay before salary sacrifice deductions. This is important.

Pension Contributions: Reduce both tax/NI AND student loan repayments Other Benefits: May not reduce student loan calculations (check specific schemes)

Example - £40,000 salary with £2,000 pension contribution:

Without Pension:

Gross pay: £40,000
Above Plan 2 threshold: £12,705
Student loan: £1,143 annually

With £2,000 Pension:

Gross pay: £40,000
Student loan calculation: Still on £40,000
Student loan: £1,143 annually (unchanged)
But saves tax/NI on the £2,000

Student loans don't care about your pension contributions. They calculate on gross, not reduced pay.

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: £7,665 National Insurance: £2,994 Plan 2 Student Loan: £2,043 Total Deductions: £12,702 Take-Home: £37,298

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 30 years
Interest rates often below inflation
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 most people? Don't bother. Make minimum payments and let forgiveness do its thing.

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 £50k on Plan 2 with a postgraduate loan? 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

Plan 5 forgiveness period: Reduced to 30 years (from 40)
Interest rate simplification: Plan 2 now RPI-only
Threshold stability: Most thresholds unchanged from 2024-25
Inflation protection: Interest rate caps continue

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

Frequently Asked Questions

When do I stop paying?

Plan 1: After 25 years OR at age 65
Plan 2/4/5: After 30 years from first repayment
Postgraduate: After 30 years from first repayment
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

Check your loan plan on the Student Loans Company website
Calculate your repayments using our tax calculator
Understand your payslip deductions
Plan career moves with student loan impact in mind
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.

Disclaimer: Student loan rules can change. This guide covers 2025-26 rates and thresholds. Individual circumstances vary. For complex situations, consult a financial advisor.