How UK Student Loan Repayments Work
Student loans in the UK are not like other debt. You only repay when your income exceeds a plan-specific threshold, the repayment is a flat percentage of the income above that threshold (not a percentage of the loan), and any remaining balance is written off after a set period — 30 years for most plans, 40 years for Plan 5. For many graduates, a significant portion of the original loan is ultimately written off rather than repaid.
How Do UK Student Loan Repayments Work?
Repayments are collected automatically through PAYE, the same way income tax and National Insurance are deducted. If you are self-employed, you pay through Self Assessment. There is no monthly minimum payment — if your income drops below the threshold in any month, you pay nothing for that month, and the loan simply waits. The amount you repay is 9% of income above the threshold (6% for postgraduate loans), regardless of the loan balance. Someone earning £40,000 on Plan 2 (threshold £27,295) repays £1,143.55 per year, or about £95 per month.
When Is My UK Student Loan Written Off?
Each plan has its own write-off rules. Plan 1, Plan 2, Plan 4 and Postgraduate loans are written off 30 years after the April you were first due to repay. Plan 5 — which applies to English students who started on or after 1 August 2023 — extends this to 40 years. Some older Plan 1 loans may write off at age 65 instead of after 30 years; the calculator uses 30 years as the conservative default for Plan 1. Loans are also written off early if you become permanently disabled or die.
Should I Pay Off My Student Loan Early?
For most graduates, no. Because the loan is income-contingent and is written off after a fixed period, the effective cost is often lower than other debt you may carry. Voluntarily paying off a 9%-above-threshold student loan while still paying 20%+ on a credit card balance is almost always the wrong call. The exception is high earners who are confident they will repay the full balance before the write-off date — for them, early repayment can save real money. The calculator shows whether you are projected to clear the balance or have some written off, which is the key signal.
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Disclaimer: Finance Atlas is not regulated by the FCA. Estimates only, not financial advice. Always consult a qualified, FCA-regulated adviser for your personal circumstances.