Student loans and your take-home

How repayments come out of your pay

You do not repay a slice of your whole salary. You repay a slice of what you earn above your plan threshold, and nothing on the pay below it. So someone just over the threshold repays very little, and the amount grows as their pay rises.

The deduction is taken through payroll, the same way as your tax. It is worked out on the same pay your National Insurance is based on. So a salary-sacrifice pension, which lowers that pay, lowers your repayment too.

Which plan are you on?

Your plan depends on where and when you studied. You are on Plan 1 if you studied in Northern Ireland, or started an English or Welsh course before September 2012. You are on Plan 2 if you started an English course between September 2012 and July 2023, or a Welsh course from September 2012. You are on Plan 4 if you studied in Scotland, and on Plan 5 if you started an English course from August 2023.

A postgraduate loan, for a master's or doctorate, is separate and can sit on top of any of these. If you are not sure, your annual statement from the Student Loans Company names your plan, and your payslip shows the deduction.

The thresholds and rates

Each plan has its own starting point. Plan 1 starts at £26,900, Plan 2 at £29,385, Plan 4 at £33,795, and Plan 5 at £25,000. All four take 9% of what you earn above the line. A postgraduate loan starts at £21,000 and takes 6%.

These thresholds usually rise a little each year, so check the current figure for your plan. The calculator always uses the up-to-date thresholds and rates.

Two loans at once

If you have more than one undergraduate loan, you still pay just one 9% deduction, over the lowest threshold that applies. A postgraduate loan is the exception. Its 6% is charged on top of the 9%, each over its own threshold, so someone with both an undergraduate and a postgraduate loan repays both at once.

A loan is not a tax, and does not change your code

This is the part people get wrong. A student loan is debt repayment, not tax, so it is left off your effective tax rate here. It also does not change your tax code. The code sets your tax-free pay and drives your Income Tax only. Your loan is a separate deduction that sits alongside it.

So if your tax code changed, your student loan did not cause it. Starting or clearing a loan moves your take-home, as the worked example above shows, but never your code.

See what comes off your pay

Pick your plan in the calculator and put your salary in. It shows the yearly repayment, what it does to your take-home, and how it sits alongside your tax rather than inside it.