Student Loan Repayments in 2026
The article explains the 2026 repayment thresholds and interest rates for Plan 2 and Plan 5 student loans, when early repayment makes sense, how to claim overpayment refunds, how postgraduate loans work, and what parents should know about funding a child's degree.
For graduates and current students across the United Kingdom, the way student loan repayments are calculated depends on which plan you are on and how much you earn. Repayments are usually taken directly from your salary through PAYE, or through self-assessment if you are self-employed. The amount you repay is a percentage of your income above a threshold, not a fixed monthly bill based on the total balance. This means your repayments can rise and fall with your earnings.
What is the student loan repayment threshold 2026?
The student loan repayment threshold is the income level above which you start making repayments. If you earn below the threshold for your plan, you do not usually need to repay anything that year. Thresholds are reviewed annually and can change. For 2026, the exact figures will depend on government announcements and the plan you are on. In recent years, Plan 2 had a threshold around £28,470, Plan 5 around £25,000, Plan 1 around £26,065, Plan 4 around £32,745, and Postgraduate Loans around £21,000. These are estimates and may be updated. Always check the official Student Loans Company or GOV.UK guidance for the current threshold. The threshold is not the same as a tax-free allowance. It only affects student loan repayments. Your employer uses the threshold to calculate the deduction from your pay.
Plan 2 vs Plan 5 student loan
Plan 2 and Plan 5 are two of the main repayment plans for students in England. Plan 2 generally applies to loans taken out between 2012 and 2023. Plan 5 applies to loans taken out from August 2023 onwards. The key differences are the repayment threshold, the repayment term, and the interest rate. Plan 5 has a lower threshold than Plan 2, which means repayments can start at a lower salary. Plan 5 also has a longer repayment term, typically 40 years, compared with around 30 years for Plan 2. Over a working life, this can affect how much interest builds up and whether the balance is ever cleared. If you are unsure which plan you are on, you can check your online account. The plan name is usually shown alongside your balance and repayment history.
Student loan interest rate 2026
The student loan interest rate 2026 will be set based on inflation measures and the plan type. Interest is added to your balance while you study and after you finish, although the rate can vary with your income. Plan 2 interest rates are often linked to the Retail Prices Index plus up to 3%, depending on earnings. Plan 5 interest rates are typically based on the Retail Prices Index only. Because inflation changes, the exact rate for 2026 is not fixed in advance. It is wise to check the official rate before making any decisions about overpaying or refinancing. Interest is calculated daily and added to your balance. This means the total you owe can grow even if you are making repayments, especially if your income is below the threshold or your repayments are low.
Should I pay off my student loan early?
Whether you should pay off your student loan early depends on your personal circumstances. For many people, student loan repayments work more like a graduate contribution than a standard debt. If your income is below the threshold, you pay nothing. If you are on a lower salary, the balance may eventually be written off before it is fully repaid. Overpaying can reduce the balance and save interest, but it may not lower your monthly PAYE deduction unless you clear the loan completely. It can also reduce money available for savings, a mortgage deposit, or an emergency fund. Consider the interest rate, your repayment term, and your other financial goals. Some people choose to overpay to clear the balance sooner. Others prefer to invest or save. There is no single right answer.
Student loan overpayment refund
A student loan overpayment refund may be available if you have paid more than required. This can happen if your income drops during the year, if you change jobs, or if you are placed on the wrong repayment plan. You can contact the Student Loans Company or HMRC to check your repayment history. Refunds are not automatic, so keeping payslips and annual statements can help. If you are self-employed, your self-assessment return should show the repayments due. If you believe you have overpaid, gather evidence and ask for a review. If you are on the wrong plan, you may have been repaying too much or too little. Correcting the plan can lead to a refund or an adjusted balance.
Comparing student loan plans and costs
When looking at real-world costs, the main figure is the percentage of income above the threshold. For Plan 1, Plan 2, Plan 4 and Plan 5, the repayment rate is 9% of earnings above the threshold. For Postgraduate Loans, it is 6%. The table below shows estimated thresholds and repayment rates for the main plans. These figures are for illustration and may change. The table uses the latest available estimates for the 2025 to 2026 academic year. The 2026 figures may be different.
| Plan or product | Provider | Key features | Cost estimation |
|---|---|---|---|
| Plan 1 | Student Loans Company | For loans before 2012, threshold around £26,065 | 9% of income above threshold |
| Plan 2 | Student Loans Company | For loans from 2012 to 2023, threshold around £28,470 | 9% of income above threshold |
| Plan 4 | Student Loans Company | For Scottish students, threshold around £32,745 | 9% of income above threshold |
| Plan 5 | Student Loans Company | For loans from August 2023, threshold around £25,000 | 9% of income above threshold |
| Postgraduate Loan | Student Loans Company | For master’s and doctoral loans, threshold around £21,000 | 6% of income above threshold |
Prices, rates, or cost estimates mentioned in this article are based on the latest available information but may change over time. Independent research is advised before making financial decisions.
For example, if you earn £30,000 on Plan 5, your repayment would be 9% of £5,000, which is £450 a year, or about £37.50 a month. On Plan 2, with a higher threshold, the same salary would lead to a smaller annual repayment. These calculations do not include interest, which is added separately. Your actual deduction also depends on how your employer reports your income and whether you have more than one job.
Student loan repayments in 2026 will continue to depend on your plan, income and the official thresholds and interest rates set by the government. Understanding the difference between Plan 2 and Plan 5, checking your repayment history, and knowing how overpayments and refunds work can help you make informed choices. Because rules and figures can change, always confirm details with the Student Loans Company or GOV.UK before acting.
