Published: June 2026 | Fact-Checked & Audited By: David Vance, CTA FCA (Chartered Tax Advisor & Accountant)
This guide is fully updated for the 2026/27 HMRC tax year. All calculations and tax rules have been audited against official UK legislation.
If you attended university in the UK, student loan repayments are a regular deduction on your payslip once your income crosses the statutory thresholds. Because student loan calculations are based on gross weekly or monthly earnings rather than annual figures, deductions can fluctuate (you can calculate these dynamically using our Student Loan Payoff Calculator). Understanding which repayment plan you are on is vital to verifying that your payslip deductions are correct.
Repayment Plans and Thresholds for 2026/27
The amount deducted from your payslip depends entirely on the plan type assigned to your loan. Each plan carries a specific income threshold, above which you pay a set percentage of your earnings. For undergraduate loans (Plans 1, 2, 4, and 5), you repay **9%** of your income above the threshold. For Postgraduate loans, you repay **6%** above the threshold.
Crucially, if you have both an undergraduate loan and a postgraduate loan, deductions are calculated concurrently. This means you could see a combined deduction rate of **15%** on earnings that exceed both thresholds, which can significantly affect your take-home pay.
Comparison Table: Student Loan Plan Thresholds 2026/27
| Plan Type | Applicable Students / Countries | Annual Threshold (2026/27) | Repayment Rate (Above Threshold) |
|---|---|---|---|
| Plan 1 | Pre-2012 English/Welsh, and all Scottish/NI pre-2021 | £26,065 | 9% |
| Plan 2 | English/Welsh undergraduate (2012 to 2023) | £27,295 | 9% |
| Plan 4 | Scottish undergraduate (post-2021) | £31,395 | 9% |
| Plan 5 | English undergraduate (post-September 2023) | £25,000 | 9% |
| Postgraduate | Master’s & Doctoral students (UK-wide) | £21,000 | 6% |
Why Student Loan Deductions Fluctuate
A common source of confusion is why student loan payments increase in months when you receive a bonus or work overtime. Unlike income tax, which is calculated cumulatively over the entire tax year, student loan repayments are calculated on a pay-period-by-pay-period basis.
For example, if you are on Plan 2, the monthly income threshold is £2,274. If you earn £2,200 normally, you pay nothing. But if a bonus pushes your pay to £3,274 in a single month, you will pay 9% on the £1,000 excess (£90), even if your total annual income remains below the £27,295 annual threshold.
Frequently Asked Questions
Q: How do I know which student loan plan I am on?
You can check your plan type by logging into your Student Loans Company (SLC) online account. Alternatively, your plan type is determined by when and where you started your university course.
Q: What is the Plan 2 student loan threshold for 2026/27?
The Plan 2 student loan repayment threshold is £27,295 per year. This breaks down to a threshold of £2,274 per month or £524 per week for payroll calculations.
Q: How is student loan calculated on a monthly payslip?
Deductions are calculated as 9% of your gross earnings above the monthly threshold for your plan. For postgraduate loans, the deduction rate is 6% above the monthly threshold of £1,750.
Q: Can I get a refund if my annual income was below the threshold?
Yes, if your total annual income was below the threshold, you can request a refund from the SLC. This often happens if you had irregular monthly earnings or bonuses that triggered deductions.
Q: Do student loan deductions reduce my income tax?
No, student loan repayments are taken from your net pay after income tax has been calculated. They do not reduce your taxable income or your National Insurance contributions.
Q: What happens if I have both Plan 1 and Plan 2 loans?
Deductions are calculated at 9% overall, but payments are allocated based on the lower threshold. You will not pay double the rate, but the total deducted is split between the loans.
Q: What is the repayment threshold for Postgraduate loans in 2026/27?
The postgraduate loan threshold is £21,000 per year, which equates to £1,750 per month. Deductions are taken at 6% of your earnings above this threshold.
Q: Why did my student loan deduction increase with my bonus?
Deductions are calculated on individual pay periods rather than your cumulative annual salary. A bonus pushes your pay further above the weekly or monthly threshold, increasing that period’s deduction.
Q: How do I stop student loan deductions when the loan is nearly paid off?
You should switch to paying by direct debit in the final 12 months of your loan. This prevents your employer’s payroll from overcollecting payments after the balance reaches zero.
Q: What is the threshold for the new Plan 5 loan?
The Plan 5 loan has a lower repayment threshold of £25,000 per year. This applies to students in England who started undergraduate courses on or after September 1, 2023.