Student Loan Guide
A straightforward guide to understanding how student loan repayments work, when you pay them back, and what happens if you can't afford them.
If you're looking at your payslip and wondering what's being deducted for your student loan - or you're about to graduate and unsure what happens next - this guide is for you. Student loans work very differently from regular loans, and understanding the basics can help put your mind at ease.
The Most Important Thing to Know
You only repay when you can afford to
Unlike a normal loan, you don't have a fixed monthly payment. You only repay your student loan when you're earning above a certain amount (called the "threshold"). If you're not earning much, you don't pay anything. If you never earn enough, you never have to pay it back.
- • Unemployed? You don't pay anything.
- • Earning £20,000? You might pay nothing or very little (depending on your plan).
- • Earning £30,000? You pay a small percentage of the amount above the threshold.
- • Can't afford to pay? The payments automatically reduce.
How Student Loan Repayments Work
Student loan repayments are calculated as a simple percentage of your income above a threshold. Think of it like this: you get to keep the first chunk of your salary completely free from student loan deductions, and then you pay a percentage on anything above that.
Look at your annual salary
Subtract the repayment threshold for your plan
Pay 9% of what's left (or 6% for postgrad loans)
Simple Example (Plan 2)
That's about the price of a couple of coffees per month - and it's automatically deducted from your salary, so you never have to think about it.
Which Plan Am I On?
There are different types of student loans depending on when and where you studied. The plan you're on determines when you start repaying and how much you pay. Here's a simple guide:
Monthly: £2448.75/month
Written off after: 30 years
Monthly: £2083.33/month
Written off after: 40 years
Monthly: £2241.67/month
Written off after: 25 years or age 65
Monthly: £2767.50/month
Written off after: 30 years
Monthly: £1750.00/month
Written off after: 30 years
Not sure which plan you're on?
Check your loan statement, payslip (it shows the deduction code), or log into your student loan account at gov.uk/sign-in-to-your-student-loan-account
Common Questions
This is the beauty of student loans - if you can't afford them, you don't pay them. Repayments are automatically calculated based on your income. If your income drops (lose your job, go part-time, etc.), your repayments automatically reduce or stop.
You never have to worry about "keeping up with payments" like you would with a credit card or bank loan.
No. Student loans don't appear on your credit report and won't affect your credit score. However, they can affect mortgage applications because lenders consider the repayments when calculating how much you can afford to borrow.
Whatever you haven't paid back is written off. It doesn't matter if you still owe £50,000 - it's gone. This means many people will never pay back their full loan, and that's completely normal and expected by the system.
Most graduates will have their loans written off. Only high earners will fully repay their loans before the write-off period. This is by design - student loans are more like a graduate tax than a traditional loan.
For most people, the answer is no. Because the loan is written off after a set period and only a percentage of your income is taken, paying extra often doesn't make financial sense unless you're a very high earner who will definitely pay it all back anyway.
Your money is usually better used elsewhere - like saving for a house deposit, building an emergency fund, or paying into a pension.
You repay both simultaneously. You'll pay 9% above your undergraduate loan threshold plus 6% above the postgraduate loan threshold (£21,000). This means on some of your income, you could be paying 15% in total for student loans.
Yes, you're still required to make repayments if you move abroad, though the threshold may be different depending on where you live. You'll need to contact the Student Loans Company to set up payments. Many people who move abroad long-term find their loans are eventually written off without full repayment.
How Repayments Are Collected
Your repayments are automatically deducted from your salary through PAYE (Pay As You Earn), just like tax and National Insurance. You don't have to do anything.
You'll see it as a deduction on your payslip. Your employer sends the money directly to HMRC, who then pass it to the Student Loans Company.
You pay through self-assessment when you file your tax return. The amount is calculated based on your annual profits above the threshold.
You'll pay it at the same time as your tax bill. HMRC calculates how much you owe based on your income, and you pay it as part of your self-assessment payment.
Calculate Your Student Loan Repayments
Use our free calculator to see exactly how much you'll pay in student loan repayments based on your salary, along with tax and National Insurance.
Calculate My Take-Home PayKey Takeaways
- ✓You only pay when you can afford it
Repayments are based on what you earn, not what you owe
- ✓It's automatic if you're employed
Deducted from your salary like tax - you don't need to do anything
- ✓It gets written off
After 25-40 years (depending on plan), any remaining debt disappears
- ✓It doesn't affect your credit score
Student loans don't appear on credit reports
- ✓Most people won't pay it all back
And that's completely normal and expected