Student Loan Repayment UK: Thresholds, Plans, and Strategies
UK student loans are repaid automatically through your payslip once you earn above the repayment threshold for your plan. You pay 9% of everything you earn above the threshold — not 9% of your total salary.
Plan 1 (started before September 2012): threshold £22,015, interest at RPI or Bank of England base rate + 1% (whichever is lower). Plan 2 (started September 2012 onwards): threshold £27,295, interest up to RPI + 3% depending on income. Plan 5 (started September 2023): threshold £25,000, interest at RPI only.
Student loans are written off after 25-40 years depending on your plan. Because of this, most graduates will never repay in full — the loan effectively acts as a graduate tax. Voluntary early repayment only makes financial sense if you are on track to clear the balance before write-off, which typically applies to higher earners.
Frequently Asked Questions
Does my student loan affect my credit score?
No. Student loans do not appear on your credit report and do not affect your credit score. However, lenders will factor the monthly repayment into mortgage affordability assessments.
Should I repay my student loan early?
Only if you are earning enough that you would repay the full balance before it is written off. For most graduates on Plan 2, voluntary overpayments are financially worse than investing the same amount.
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