What is Student Loan Repayment? UK Definition 2026/27
Quick Answer
Repayments deducted from salary when earning above the threshold.
Definition of Student Loan Repayment
Student loan repayments are collected through PAYE when your income exceeds the threshold for your plan type. Plan 1 (pre-2012) threshold is £24,990 at 9%. Plan 2 (post-2012) threshold is £27,295 at 9%. Plan 5 (post-2023) threshold is £25,000 at 9%. Postgraduate loans have a separate threshold.
Student Loan Repayment — Key Facts for 2026/27
| Plan 1 threshold | £24,990 |
| Plan 2 threshold | £27,295 |
| Plan 5 threshold | £25,000 |
| Repayment rate | 9% |
How Student Loan Repayment Works — Example
- 1Salary: £40,000
- 2Plan 2 threshold: £27,295
- 3Amount above threshold: £12,705
- 4Annual repayment: £12,705 × 9% = £1,143
- 5Monthly deduction: £95.29
How Student Loan Repayment Affects Your Tax
Student loan repayments significantly affect take-home pay. Understanding your plan type and threshold helps with budgeting. Loans are written off after 25-40 years depending on plan - early repayment is not always beneficial.
Official HMRC Guidance on Student Loan Repayment
For official guidance, refer to HMRC's documentation. Tax rules can change, so always verify current rates and thresholds on gov.uk.
GOV.UK: Repaying your student loanFrequently Asked Questions about Student Loan Repayment
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.