Key facts (2026): UK student loan repayments are income-contingent — you only repay when your income exceeds the threshold for your plan. Plan 2 (most graduates from 2012–2023): repay 9% of income above £25,000, written off after 30 years. Plan 5 (2023 onwards): repay 9% above £25,000, written off after 40 years. Most Plan 2 borrowers will never fully repay their loan.

Student loans in England are not like commercial debt — they do not affect your credit rating, cannot result in bailiff action, and are wiped after the plan's term regardless of the outstanding balance. Understanding how the system actually works — and why most graduates will never repay in full — changes the financial calculation significantly.

Plan 2 vs Plan 5 — Key Differences

Plan 2 (students who started 2012–2023): Repayment threshold £25,000/year; 9% of income above threshold; written off after 30 years. Plan 5 (students starting from 2023): Repayment threshold £25,000/year; 9% of income above threshold; written off after 40 years. Note: the repayment threshold is frozen at £25,000 for Plan 5, meaning more graduates will repay more over time as wages rise.

How Repayments Work in Practice

Repayments are collected automatically through PAYE if employed, or through Self Assessment if self-employed. On a £35,000 salary, you repay 9% of (£35,000 - £25,000) = 9% of £10,000 = £900/year = £75/month. On a £25,000 salary, you repay nothing. Interest accrues at RPI + 0% to 3% for Plan 5 (interest rates changed significantly from 2023). The outstanding balance grows with interest while income is below threshold.

Should You Make Voluntary Overpayments?

For most Plan 2 borrowers, voluntary overpayments are financially irrational — the majority of graduates will have their balance wiped at the 30-year point regardless of what remains. Overpaying Plan 2 loans typically just reduces the amount written off, not the total paid. Plan 5 borrowers with high earnings (likely to repay in full before 40 years) may benefit from early repayment. Use a student loan calculator to model your specific situation.

Our Verdict

Student loan debt in the UK functions more like a graduate tax than a traditional loan for most borrowers. The monthly repayment is modest relative to salary, it disappears from your pay automatically, and it is wiped after 30 or 40 years regardless of balance. Focus your financial energy on building savings and a pension rather than overpaying a student loan that will likely be cancelled.

Frequently Asked Questions

When do student loan repayments start UK?

When your income exceeds £25,000/year for Plan 2 and Plan 5. Repayments are 9% of income above the threshold.

How much do I repay on £30,000 salary?

9% of (£30,000 - £25,000) = 9% of £5,000 = £450/year = £37.50/month.

When is my student loan written off UK?

After 30 years from the April after you first became eligible to repay (Plan 2). After 40 years for Plan 5.

Disclaimer: For informational purposes only. Verify with gov.uk or qualified professionals before making decisions.

Last updated: April 2026 · Author: Chandraketu Tripathi