Originally published 2 May 2017. Substantially reviewed on 3 November 2026.
Information checked: 3 November 2026. This guide explains UK income-contingent student loans. Private borrowing and older mortgage-style student loans have different terms.
Your student loan balance matters, but it does not tell you what will come out of your next payslip. For income-contingent loans, repayments depend on your repayment plan and earnings above its threshold. There is no single £21,000 threshold or 30-year cancellation rule covering everyone.
Start by identifying your repayment plan
Check your Student Loans Company account rather than guessing from your age. Where you received student finance, the course and its start date can affect your plan. Postgraduate borrowing can also have a separate repayment alongside an undergraduate loan. Use GOV.UK’s student loan guide to establish which rules apply.
Repayment thresholds for 2026/27
For UK payroll deductions in the tax year starting 6 April 2026, the annual thresholds are:
| Plan | Annual threshold | Rate on earnings above the threshold |
|---|---|---|
| Plan 1 | £26,900 | 9% |
| Plan 2 | £29,385 | 9% |
| Plan 4 | £33,795 | 9% |
| Plan 5 | £25,000 | 9% |
| Postgraduate Loan | £21,000 | 6% |
Source: HMRC’s 2026/27 collection figures. Payroll uses the relevant pay-period threshold, so a bonus or variable earnings can affect a particular deduction. These are repayment rates, not interest rates. Overseas repayment arrangements differ.
As a simple annual illustration, £30,000 of earnings on Plan 5 is £5,000 above its threshold: 9% of that difference is £450. Actual deductions depend on pay periods and circumstances. Someone with both an undergraduate and postgraduate loan should check the combined rules rather than using this example.
Interest and cancellation are separate questions
Interest can be added while you study and while your income is below the repayment threshold. It is incorrect to say most students are charged no interest. Rates depend on the plan and can change; check the current figure in your account and the official terms and conditions.
Cancellation dates also vary. Plan 2 is normally written off 30 years after the April repayments first became due; Plan 5 uses 40 years. Plan 1 and Plan 4 have rules that depend on when the first loan was paid. Consult the official cancellation rules for your own loan. Do not assume that reaching retirement cancels it.
Should you make extra payments?
A voluntary payment reduces your balance, but does not ordinarily reduce the income-based amount deducted from your pay while a balance remains. It may save interest if you would otherwise repay the loan in full; it may save nothing overall if that amount would eventually have been cancelled. Voluntary repayments generally cannot be refunded.
Before paying extra, compare the likely benefit with your need for emergency cash and other debts. Do not borrow at commercial rates just to reduce a student loan balance without understanding what protections and flexibility you would lose.
Practical checks when your circumstances change
Keep your employment and overseas details up to date with SLC, check the plan shown to your employer, and query deductions that look wrong. If your annual income was below the relevant threshold but deductions were taken, check whether you qualify for a refund through the official guide. Student finance remains a debt with contractual responsibilities; ignoring correspondence is not a repayment strategy.
When budgeting for study, check the tuition and maintenance support available for your course and home nation. A bursary, fee waiver or loan should be assessed on its actual conditions, rather than assuming one is always the best choice.
