All figures below are the published GOV.UK rates and thresholds in force on 27 July 2026, for the 2026-27 tax year. General information, not personal financial advice.
There is a moment most graduates have, usually somewhere in their late twenties, when they log into the Student Loans Company for the first time in years and see a balance that has gone up. Forty-something thousand pounds. Interest quietly compounding. And a very natural instinct kicks in: kill it.
For a large majority of borrowers, acting on that instinct is a mistake — and an expensive one, because the money is gone for good. A UK student loan is not a credit card, a car loan or a mortgage. It is a payroll deduction with an expiry date. Understanding that one structural difference changes the whole decision.
What you actually pay each month
Your repayment has nothing to do with the size of your balance. It is a fixed percentage of the slice of your income above a threshold, taken through PAYE alongside tax and National Insurance. Someone with £12,000 outstanding and someone with £60,000 outstanding, on the same salary and the same plan, pay exactly the same amount every month.
| Plan | Who is on it | Threshold | Rate above | Written off |
|---|---|---|---|---|
| Plan 1 | England and Wales, course started before September 2012; all Northern Ireland | £26,900 a year £2,241 a month | 9% | 25 years |
| Plan 2 | England and Wales, course started September 2012 to July 2023 | £29,385 a year £2,448 a month | 9% | 30 years |
| Plan 4 | Scotland | £33,795 a year £2,816 a month | 9% | 30 years |
| Plan 5 | England, course started on or after 1 August 2023 | £25,000 a year £2,083 a month | 9% | 40 years |
| Postgraduate | Master's and doctoral loans, England and Wales | £21,000 a year £1,750 a month | 6% | 30 years |
Thresholds and rates from GOV.UK for the 2026-27 tax year. The clock on the write-off starts in the April you were first due to repay, which is the April after you left your course. Plan 1 loans taken before 1 September 2006 are written off at 65 instead; Plan 4 loans taken before 1 August 2007 at 65 or after 30 years, whichever comes first.
Put a real salary through it. On £34,000, with the deduction worked out on your monthly pay and rounded down to the whole pound, you would see:
- Plan 1 — £53 a month. £639 over the year.
- Plan 2 — £34 a month. £415 over the year.
- Plan 4 — £1 a month. £18 over the year, because the Scottish threshold is only £205 below that salary.
- Plan 5 — £67 a month. £810 over the year.
- Postgraduate — £65 a month. £780 over the year, and it stacks on top of your undergraduate plan. Plan 2 plus a postgraduate loan on £34,000 is £99 a month.
That is the entire cost of the loan to you this year. Not the balance. Not the interest. Ninety-nine pounds. If you want to see the same deduction on your own payslip and understand every other line next to it, our guide to reading your payslip walks through it.
The write-off date is the whole game
Here is the part that changes the decision. Every plan has an end date, and on that date whatever is left is cancelled. Not renegotiated, not passed to a collection agency — cancelled.
The Department for Education publishes a forecast of how many borrowers will ever clear their loans. In its student loan forecasts for England published on 9 July 2026, it expects 55% of full-time undergraduate borrowers starting in the 2025/26 academic year to repay in full — up sharply from 32% of the 2022/23 cohort, because Plan 5 runs for forty years at a lower threshold. Read those numbers the other way round and the picture is stark: on Plan 2, roughly two in three borrowers are forecast never to clear the balance at all. Their loan ends when the clock runs out, not when the debt is paid.
The one-way doorVoluntary extra repayments cannot be reversed. NIdirect states the position plainly: the Student Loans Company does not refund voluntary payments unless you have finished repaying the loan and they turn out to be genuine overpayments. Money you put in cannot come back out for a house deposit, a redundancy or a bad year of self-employment.
Why the interest rate matters far less than you think
Interest is the number that panics people, so it is worth being precise about it. As at 27 July 2026, GOV.UK gives the rates as 3.2% on Plan 1, Plan 4 and Plan 5, and 6.2% on a Postgraduate Loan. Plan 2 uses a sliding scale tied to income: 3.2% if you earn £29,385 or less, rising gradually to 6.2% once you earn £52,885 or more. The government has capped Plan 2 and postgraduate interest at 6% for the academic year running from 1 September 2026 to 31 August 2027.
Now the important bit. If your balance is never going to be cleared, the interest rate is decoration. It changes a number on a statement you will never settle. It does not change your monthly deduction by a single penny, because that deduction is set by your salary and your plan, not by what you owe. The rate only becomes real money for the borrowers who are on track to clear the balance — and for them it matters a great deal.
A worked example: two graduates, same balance, opposite answers
Both of these are illustrative — the arithmetic is real, the people are not. Both are on Plan 2 with £48,000 outstanding, both were first due to repay in April 2021, so both loans are written off in April 2051.
The first graduate earns £34,000. Her statutory repayment is 9% of the £4,615 above the threshold: £415 for the year. Her income sits low in the sliding interest band, so her rate is around 3.8%, and interest on £48,000 comes to about £1,824. Her balance therefore rises by roughly £1,409 in the year. Suppose she decides to fight it with £100 a month. That is £1,200 a year, £30,000 over the 25 years left to her write-off date — and even then, £1,200 plus her £415 does not cover the £1,824 of interest, so the balance still climbs in year one. She would be handing over £30,000 of real money to make no difference at all to what she was ever going to pay.
The second graduate earns £75,000 and expects to be over £100,000 within five years. His statutory repayment is 9% of the £45,615 above the threshold: £4,105 for the year. He is in the top interest band, so 6.2% on £48,000 is £2,976. His balance falls by £1,129 in year one, and will fall faster every year as the balance shrinks and his pay rises. He has a genuine chance of clearing it well before 2051. For him, an overpayment shortens the run and cancels real interest he would otherwise pay. Overpaying is a reasonable thing for him to consider.
Same plan, same balance, same write-off date, opposite answers. The variable that decided it was income trajectory — not the debt.
The four-question test
Work through these in order. Overpaying only makes sense if all four come back yes.
- Do you know your plan and your write-off date? Take the April you were first due to repay and add 25, 30 or 40 years depending on the table above. Write the actual date down. If you cannot name it, you are not in a position to make this decision.
- Is your balance falling? Your annual statement shows repayments made and interest added. If interest is the bigger number, your balance is growing under the statutory schedule and overpaying is fighting a losing battle with your own money.
- Will your income clear it in time? A rough test: multiply this year's repayment by the years left before write-off. If that total is comfortably above your balance, you are on track. If it is a fraction of it, you are not, and no realistic pay rise closes the gap.
- Is there genuinely nothing ahead of it in the queue? Emergency fund, expensive debt, employer pension match, mortgage. If any of those is unfinished, the student loan is not the best home for a spare pound.
Where that money almost always works harder
If the test says no, the spare money still has somewhere useful to go. This is the order most coaching frameworks use, and the logic behind it is simple: each rung either removes a risk or earns a guaranteed return that a student loan overpayment cannot match.
- An emergency fund first. MoneyHelper's guidance is three to six months of essential outgoings in an instant-access account. It is the only thing on this list that stops a bad month becoming expensive debt. Work out your own number with the survival budget calculator, then size the pot with the emergency fund calculator.
- Then expensive debt. A credit card at 24% is a genuinely different animal from a student loan at 3.2% that expires. Clear that first, every time. The debt payoff calculator shows what the order of attack is worth in pounds and in years.
- Then the employer pension match. Auto-enrolment minimums are 8% of qualifying earnings between £6,240 and £50,270, of which your employer must put in at least 3%. Many employers will match more than the minimum if you increase your own contribution — and a matched pound is an immediate 100% return before any tax relief or investment growth. Nothing else in personal finance does that. Our pension reality check covers what the pot needs to look like.
- Then mortgage overpayments. A mortgage is real, secured, and will not be written off in thirty years. Overpaying it saves interest with certainty.
Five minutes, this week
You do not need a spreadsheet. You need five minutes and four facts.
- Sign in to your student loan repayment account on GOV.UK and write down your plan number and your current balance.
- Find the April you were first due to repay, add 25, 30 or 40 years, and write the write-off date on the same piece of paper.
- From your annual statement, note repayments made and interest added last year. Subtract one from the other. That single number tells you whether the balance is going up or down.
- Multiply last year's repayment by the years remaining. Compare it with the balance. That is your answer.
If the balance is rising and the multiplication comes nowhere near, stop looking at the number. It is not a debt you will ever clear; it is a payroll deduction with a finish line. Redirect the energy to the emergency fund, the match and the mortgage, and let the clock do its work.
Where to check the official positionThresholds, interest rates and write-off rules are published at GOV.UK: repaying your student loan, and your own balance and statements are in your account at GOV.UK: manage your student loan balance. For free, impartial money guidance backed by government, use MoneyHelper. The Plan 2 threshold is frozen at £29,385 for three years from April 2027, announced at the Autumn Budget 2025 and set out in the House of Commons Library briefing on student loan thresholds.
Where coaching fits
Buzz Money Coach does the part that comes before any product decision: getting the facts straight, putting the numbers in order, and helping you decide what your money should do next. Coaching is not regulated financial advice, and we do not recommend pensions, investments or mortgages. Where a decision genuinely needs a regulated adviser we say so, and can introduce you to Equity & General, authorised and regulated by the FCA (No. 474163) — optional, with no obligation, and they pay us a commission if you proceed. If you are weighing up which kind of help you need, our guide on coaches and advisers sets out the difference.
If you want a clear picture of where the student loan sits among everything else, the free Financial Freedom Score takes about seven minutes and gives you one useful next action. If you would rather have the whole thing written down and sequenced, that is what the Plan is for.