Student Loan Repayment Threshold – UK Rates for 2026/27
Understanding how student loan repayment thresholds work is essential for anyone managing or planning for UK student debt. These thresholds determine the income level at which borrowers begin making repayments, and they vary significantly depending on which repayment plan applies to your loan.
The repayment system operates differently across the various student loan plans, with thresholds that can change annually. Whether you are repaying a Plan 1, Plan 2, Plan 4, Plan 5, or Postgraduate loan, knowing your specific threshold helps you budget effectively and understand how much of your income goes toward student loan repayments each month.
This guide explains the current thresholds for the 2026/27 tax year, how repayments are calculated, which plan applies to your circumstances, and what changes may affect borrowers in the coming years.
What is the current student loan repayment threshold in the UK?
The repayment thresholds for 2026/27 establish the income levels at which borrowers must begin making repayments. Each plan has its own threshold, reflecting differences in how loans were structured when introduced. The UK government’s official guidance provides detailed information on these thresholds and how they apply to different loan types.
Current Plan 2 Threshold
£29,385 per year
Standard Repayment Rate
9% above threshold
2026/27 Tax Year
Updated thresholds now in effect
Postgraduate Rate
6% above threshold
Key facts about UK student loan repayment thresholds
- Thresholds apply to gross annual income before tax and national insurance deductions
- Repayments are calculated only on income above the threshold, not your entire salary
- Threshold amounts differ between Plan 1, Plan 2, Plan 4, Plan 5, and Postgraduate loans
- All plans except Postgraduate charge a 9% repayment rate on income above the threshold
- Repayments automatically stop if your income falls below your plan’s threshold
- Multiple loan holders may repay on more than one plan simultaneously
- Plan 2 threshold has increased to £29,385 for 2026/27, up from £28,470 the previous year
Current repayment thresholds by plan
| Repayment Plan | Annual Threshold | Monthly Threshold | Weekly Threshold | Repayment Rate |
|---|---|---|---|---|
| Plan 1 | £26,900 | £2,241 | £517 | 9% |
| Plan 2 | £29,385 | £2,448 | £565 | 9% |
| Plan 4 (Scotland) | £33,795 | £2,816 | £649 | 9% |
| Plan 5 | £25,000 | £2,083 | £480 | 9% |
| Postgraduate Loan | £21,000 | £1,750 | £403 | 6% |
These figures represent the 2026/27 tax year thresholds that came into effect in April 2026. The Student Loans Company publishes official repayment guidance for all plan types.
What will the student loan repayment threshold be in 2026/27?
The 2026/27 tax year brought several changes to student loan repayment thresholds. Plan 2 saw the most significant movement, with the threshold rising to £29,385 from £28,470 in 2025/26. This follows a period when Plan 2 thresholds were frozen at £27,295 between 2023 and 2025, a policy that drew criticism from higher education finance experts.
Changes to Plan 2 thresholds
Plan 2 thresholds have undergone notable fluctuations in recent years. After remaining frozen at £27,295 from April 2023, the threshold increased to £28,470 for 2025/26 and now stands at £29,385 for 2026/27. According to analysis from thinkmoney, this gradual increase provides some relief for borrowers, though the threshold remains well below inflation-adjusted values from earlier years.
The Plan 5 threshold of £25,000 has remained frozen since its introduction and shows no indication of increasing for the 2026/27 tax year.
Future threshold changes under consideration
According to the November 2025 Budget, the Plan 2 threshold will be frozen at £29,385 for three years from April 2027, rather than increasing with inflation. This freeze applies specifically to Plan 2 and was announced as part of broader student loan reform discussions. Policy documents from the Higher Education Policy Institute examine the long-term implications of this freeze for graduate repayment amounts.
Plan 1 and Plan 4 thresholds have increased to £26,900 and £33,795 respectively for 2026/27, following standard annual review processes. These changes reflect adjustments based on average earnings growth, as outlined in government repayment guidance.
What student loan plan am I on and what is its repayment threshold?
Identifying your student loan plan is the first step to understanding your repayment obligations. Your plan depends on when you started your course, where you studied, and the type of loan you received. Each plan has different repayment terms, interest rates, and write-off periods.
Which plan applies to your loan
- Plan 1: English and Welsh students who started their course before September 2012, or any Northern Irish student regardless of start date
- Plan 2: English and Welsh students who started between September 2012 and July 2023
- Plan 4: Scottish students who received their loan from the Student Awards Agency Scotland (SAAS)
- Plan 5: English and Welsh students who started their course from September 2023 onwards
- Postgraduate Loan: Students who took out a Master’s or Doctoral loan, regardless of when they started undergraduate study
You can verify your plan type and outstanding balance through your online Student Finance account or by contacting the Student Loans Company directly.
Why plan identification matters
The plan you are on determines not only your threshold but also how interest is calculated and when your loan is written off. Plan 2 loans, for example, are typically written off after 30 years from the April following course completion, while Plan 1 loans may be written off after 25 years. Understanding your plan helps you make informed decisions about voluntary repayments and long-term financial planning.
How do I calculate my student loan repayments above the threshold?
Student loan repayments are calculated only on income above your plan’s threshold, making it straightforward to estimate your monthly contributions. The formula is consistent across Plans 1, 2, 4, and 5: subtract your threshold from your annual gross income, then multiply by the repayment rate of 9%.
Understanding the repayment calculation
For example, a borrower on Plan 2 earning £35,000 annually would calculate their repayment as follows: £35,000 minus the Plan 2 threshold of £29,385 equals £5,615 in assessable income. Multiplying this by 9% results in an annual repayment of £505, or approximately £42 per month.
| Repayment Plan | Threshold Deduction | Taxable Amount | Annual Repayment | Monthly Repayment |
|---|---|---|---|---|
| Plan 1 | £35,000 − £26,900 | £8,100 | £729 | £61 |
| Plan 2 | £35,000 − £29,385 | £5,615 | £505 | £42 |
| Plan 4 | £35,000 − £33,795 | £1,205 | £108 | £9 |
| Plan 5 | £35,000 − £25,000 | £10,000 | £900 | £75 |
Repayments are calculated on gross income before tax, national insurance, and pension contributions. Using your full annual salary rather than monthly figures provides the most accurate estimate.
Multiple loan repayments
Borrowers with both an undergraduate and a postgraduate loan may need to make repayments on two separate plans simultaneously. In this case, each plan’s repayment is calculated independently against its respective threshold. This means a borrower on Plan 2 with a postgraduate loan earning £35,000 could face combined repayments of up to 15% on income above the lowest threshold.
Repayments are handled automatically through the PAYE system for employees, with HM Revenue and Customs passing the relevant amounts to the Student Loans Company. Self-employed individuals must make repayments directly through their self-assessment tax returns.
Historical changes to student loan repayment thresholds
Understanding how thresholds have evolved provides context for current rates and future expectations. The repayment threshold system has undergone significant changes since its introduction, with adjustments driven by policy decisions, inflation, and government fiscal priorities.
- Pre-2012: Plan 1 thresholds were established, with repayments beginning at lower income levels than today
- September 2012: Plan 2 introduced for new borrowers, marking a shift in repayment structure and interest rates
- 2021-2023: Plan 2 threshold frozen at £27,295, a policy that affected millions of borrowers
- 2025/26: Plan 2 threshold increased to £28,470, ending the freeze period
- 2026/27: Current thresholds take effect, with Plan 2 at £29,385 and Plan 1 at £26,900
- April 2027 onwards: Planned three-year freeze on Plan 2 threshold at £29,385 pending parliamentary approval
Research from the Institute for Fiscal Studies provides detailed analysis of how Plan 2 thresholds have changed over time and the impact on graduate lifetimes earnings and repayment amounts.
What we know and what remains uncertain about student loan thresholds
While many aspects of student loan repayment thresholds are clearly established, some elements carry uncertainty that borrowers should be aware of when planning their finances.
The following comparison distinguishes between confirmed information and proposals that may change before implementation.
| Established Information | Information Subject to Change |
|---|---|
| 2026/27 Plan 2 threshold: £29,385 | Post-April 2027 threshold freeze duration |
| 2026/27 Plan 1 threshold: £26,900 | Future increases to Plan 5 threshold |
| Standard 9% repayment rate for undergraduate plans | Potential policy changes following general elections |
| Postgraduate 6% repayment rate | Interest rate adjustments based on market conditions |
| Automatic repayment system via PAYE | Changes to write-off periods |
Understanding how student loan repayment thresholds work
Student loan repayment thresholds function as income floors rather than deductions from total earnings. This design means lower earners are protected from repayment obligations, while higher earners contribute proportionally more. The threshold system applies across all employment types, whether you are a salaried employee, contractor, or self-employed professional.
The policy rationale behind thresholds recognises that student loan repayments should not create financial hardship for those on lower incomes. When income falls below the threshold, repayments cease entirely. This automatic adjustment provides a built-in safety mechanism that adapts to life changes, career breaks, or periods of reduced earnings.
Official sources and further guidance
“You repay 9% of your income over the repayment threshold (or 6% for postgraduate loans). Repayments are automatically taken from your salary by your employer and sent to HM Revenue and Customs.”
For detailed information about your specific circumstances, the Student Loans Company provides personalised account management through their online portal. The UK Minimum Wage Update October 2025 resource offers additional context on how income thresholds affect various financial obligations for workers.
Key takeaways on student loan repayment thresholds
Understanding your student loan repayment threshold is essential for accurate financial planning. The 2026/27 thresholds range from £25,000 for Plan 5 to £33,795 for Plan 4, with repayments calculated at 9% of income above these figures. Plan 2 saw an increase to £29,385, while Plan 5 remains frozen at £25,000. Borrowers should verify their plan type through official channels and monitor future announcements regarding threshold changes, particularly the planned freeze on Plan 2 from April 2027. For those exploring career paths, resources like the Sales or Retail Jobs UK Salaries guide can help contextualise how student loan repayments interact with different salary levels.
Frequently asked questions
What was the Plan 2 repayment threshold in 2023?
The Plan 2 threshold was frozen at £27,295 from April 2023 through the 2024/25 tax year before increasing to £28,470 in 2025/26.
How much do you repay on a student loan above the threshold?
You repay 9% of your income above the threshold for Plans 1, 2, 4, and 5. Postgraduate loans require 6% repayment above the threshold.
What is the Plan 1 repayment threshold?
The Plan 1 threshold for 2026/27 is £26,900 annually, £2,241 monthly, or £517 weekly.
How do I find out which student loan plan I am on?
Check your online Student Finance account or contact the Student Loans Company directly to confirm your plan type and current balance.
Will the Plan 2 threshold increase after April 2027?
The November 2025 Budget announced a three-year freeze on the Plan 2 threshold at £29,385 from April 2027, subject to parliamentary approval.
Can I repay my student loan early without penalty?
Yes, voluntary repayments can be made at any time without penalty. However, consider whether overpaying aligns with your broader financial priorities.
Do student loan repayments affect my credit score?
Student loan repayments do not appear on your credit file and do not directly impact your credit score as they are collected through payroll.
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