Student loans are available to cover tuition fees and help towards accommodation and other costs. The amount available depends on the person’s circumstances. Tuition fees vary across the UK. In England and Wales, tuition fees for a standard full-time course are capped at £9,535 for the academic year 2025/26.

Types of student loan plan 

The rules for determining which plan or plans a person is on are summarised below: 

• England (ie, application made to Student Finance England):
  • course started before 1 September 2012: Plan 1
  • undergraduate or Postgraduate Certificate of Education (PGCE) course that started between 1 September 2012 and 31 July 2023: Plan 2
  • undergraduate or PGCE course that started on or after 1 August 2023: Plan 5
  • postgraduate master’s or doctoral course that started on or after 1 September 2012: Plan 3
• Wales (ie, application made to Student Finance Wales):
• course started before 1 September 2012: Plan 1;
• undergraduate or PGCE course that started on or after 1 September 2012: Plan 2.
• postgraduate master’s or doctoral course that started on or after 1 September 2012: Plan 3
• Scotland (ie, applied to Student Awards Agency Scotland): Plan 4.
• Northern Ireland (ie, applied to Student Finance Northern Ireland: Plan 1.

Plan 3 is often referred to as Postgraduate Loan Plan (PLP).  

How are repayments calculated? 

Repayments are due where the person’s income exceeds the threshold amount for their plan. However, the earliest that a person is required to make repayments is generally the April after they have left the course. 

The amount payable is calculated by applying the repayment rate for the plan to the amount by which the person’s income exceeds the threshold amount.  

	2026/27	2026/27
	Annual threshold	Rate of deduction
Plan 1	£26,900	9%
Plan 2	£29,385	9%
Plan 3/PLP	£21,000	6%
Plan 4	£33,795	9%
Plan 5	£25,000	9%

There has been concern that the rate of deduction for student loan repayments creates a high marginal “tax” charge for graduates. For example, a person making plan 2 repayments on a salary of £80,000 will pay income tax and national insurance contributions (NIC, and make student loan repayments, at the following rates for 2026/27:

Income	Income tax	NIC	Student loan	Total
£0 - £12,570	0%	0%	0%	0%
£12,571 - £29,384	20%	8%	0%	28%
£29,385-£50,270	20%	8%	9%	37%
£50,271 - £80,000	40%	2%	9%	51%

Generally, the threshold amounts for plans 1, 2, 4 and 5 change on 6 April each year. However, at the Autumn Budget 2025, the government announced that it would maintain the plan 2 annual repayment threshold at £29,385 for three years from April 2027. Coupled with wage growth, this is likely to mean more people having to make repayments, and an increase in the amounts being repaid (fiscal drag).  

Income includes earned income (ie, salary, bonus, overtime), profits from self-employment and unearned income in excess of £2,000 (eg, dividends, interest).  

How are repayments made? 

Repayments are: 

• deducted from the person’s earnings from employment, through the pay as you earn (PAYE) system;
• made through self assessment, where the person completes a tax return. Any repayments made through PAYE will be taken into account; or
• paid directly to the Student Loan Company in some circumstances, including where the person has left the UK.  

The Tax Faculty will explore issues around student loans and PAYE and self assessment in future articles.  

How is interest calculated?  

Interest rates are set on 1 September each year and are normally based on the Retail Price Index (RPI). The rates of interest for the period from 1 September 2025 to 31 August 2026 are: 

	Annual income	Rate
Plan 1	n/a	3.2%
Plan 2	£28,470 or less	3.2%
	£28,471 to £51,245	3.2% plus up to 3%
	£51,245 or more	6.2%
Plan 3 (postgraduate)	n/a	6.2%
Plan 4	n/a	3.2%
Plan 5	n/a	3.2%

When do repayments stop? 

Repayments continue to be made until the balance due is: 

• paid off; 
• written off (this depends on the plan type, but it is generally 30 years after the April they were first due to make repayments); or 
• cancelled (ie, on the person’s death or because the person is permanently unfit to work).