UK Student Loan

About the UK Student Loan

The UK student loan calculator shows exactly how much you repay each month under Plan 1, Plan 2, or Plan 5, whether your loan is likely to be fully repaid or written off at the end of the repayment term, and — critically — whether overpaying your student loan makes any financial sense for your individual situation. The answer to that last question surprises almost everyone who asks it. UK student loans are one of the most misunderstood financial products in existence. Unlike a conventional loan where every pound of repayment reduces your debt and saves you interest, UK student loans operate more like a graduate income tax for most borrowers — particularly those on Plan 2 and Plan 5. The key insight is that the majority of Plan 2 and Plan 5 borrowers will never fully repay their loan before it is written off. Under Plan 2 (for English and Welsh students who started university after September 2012), any outstanding balance is written off 30 years after the April following graduation. Under Plan 5 (for students starting from August 2023 onwards), the write-off period extends to 40 years. For the many borrowers projected to have balances remaining at write-off — because their income never reached a level where 9% of earnings above the threshold clears both the principal and interest — the loan is effectively a payroll deduction that ends at write-off, not a debt in the conventional sense. This has a critical implication: making voluntary overpayments on a Plan 2 or Plan 5 loan that is projected to be written off anyway reduces the amount written off at no benefit to you. Every pound you overpay is a pound you did not need to pay. Our calculator models this explicitly by projecting your repayment trajectory based on your current income and assumed salary growth, showing whether full repayment is realistic or whether write-off is the likely outcome. Plan 1 borrowers (who started university before September 2012) have a shorter 25-year write-off period but also a lower threshold (£24,990 in 2025-26) and lower interest rate — many Plan 1 borrowers are close to full repayment and the financial picture is very different from Plan 2. The three plans are compared side-by-side at your income level so you can immediately see the monthly repayment difference between them.

How It Works

Annual repayment = max(0, (Gross Income − Threshold) × 9%). Monthly repayment = Annual / 12. Balance grows by interest rate annually if income is low relative to balance. Simulation runs year by year: balance = previous balance + (balance × interest rate) − annual repayment. If balance reaches zero, loan is fully repaid. If balance remains at the write-off year, it is cancelled. Example: Plan 2, £35,000 income, £45,000 balance, 3% salary growth. Above threshold: £35,000 − £27,295 = £7,705. Annual repayment: £7,705 × 9% = £693. Monthly: £57.75. At 7.8% interest: balance grows by £3,510 first year but reduces by £693 = net growth of £2,817. Balance grows for many years before salary growth makes repayments meaningful. Projected write-off: likely after 30 years with substantial balance remaining.

Tips & Best Practices

• ✓For most Plan 2 and Plan 5 borrowers, the advice from most financial advisers is clear: do not make voluntary overpayments. If your loan is projected to be written off, every pound overpaid is money you did not need to spend. Check our write-off projection for your income and growth assumptions.
• ✓The exception: if our calculator projects you will fully repay your loan before write-off AND you have a high income trajectory that makes that projection reliable, overpaying to reduce total interest can make sense — particularly on Plan 1 loans with their shorter 25-year horizon.
• ✓Your employer deducts student loan repayments automatically through PAYE alongside income tax and NIC. If you are self-employed, you report and pay through Self Assessment. The repayment is based on gross income, not net — check that your employer is using the correct plan type for your loan.
• ✓Interest on Plan 2 loans is currently RPI + 3% while studying and earning above the threshold — one of the higher rates in the UK lending market. However, for write-off-trajectory borrowers, this high interest rate is largely irrelevant since the balance is cancelled regardless.
• ✓Scottish students who started university from 2012 onwards are typically on Plan 4 (not Plan 1, 2, or 5), which has a higher threshold (£31,395 in 2025-26) and different write-off terms. Our calculator covers Plans 1, 2, and 5 — Scottish borrowers should check their specific plan documentation.
• ✓The write-off does not happen automatically — Student Finance England cancels the balance after the qualifying period. There is no tax implication for the written-off balance (unlike some US loan forgiveness). You do not need to notify HMRC or take any action.
• ✓Changing jobs across international borders: if you move abroad permanently, you must notify the Student Loans Company and make repayments directly based on your overseas income. Repayment thresholds for overseas earners are set by country of residence — different from UK thresholds.
• ✓Marriage, children, and household changes do not affect your student loan repayment — it is based solely on your individual income, not household income. This is fundamentally different from the US income-driven repayment system.

Who Uses This Calculator

Plan 2 graduates deciding whether to make voluntary overpayments — the calculator shows whether their loan is projected to be written off, making overpayment financially irrational. New Plan 5 graduates understanding the 40-year repayment horizon and how their projected monthly deductions compare to Plan 2. Plan 1 borrowers who may be close to full repayment checking their remaining balance and trajectory. Graduates comparing whether to use savings to repay student loans versus investing in an ISA or pension — the write-off projection is essential context. HR and payroll professionals explaining the student loan deduction system to new employees. Scottish students (on different thresholds) understanding their specific plan terms.