UK student loan repayments and your take-home pay

If you studied at university in the UK, a slice of your salary above a certain threshold goes straight back to the Student Loans Company — collected through payroll, right alongside National Insuranceand tax. It is one of the most common reasons a graduate’s take-home pay is lower than a generic calculator suggests. Here is how it works for 2025/26.

It is a payroll deduction, not a normal loan

A UK student loan does not behave like a credit-card or mortgage debt. You repay a fixed percentage of the income you earn above a threshold, regardless of how much you still owe. Earn below the threshold and you repay nothing that month; earn above it and a percentage of only the excess is deducted. Any balance left after the write-off period (which varies by plan) is cancelled. In practice it behaves more like an extra tax band than a debt.

Which plan are you on?

Your plan depends on where and when you studied. For 2025/26 the annual thresholds and rates are approximately:

• Plan 1(English/Welsh pre-2012 starters, and Northern Ireland) — 9% above about £26,065.
• Plan 2(English/Welsh 2012–2022 starters) — 9% above about £28,470.
• Plan 4(Scottish students) — 9% above about £32,745.
• Plan 5(English students starting from 2023) — 9% above about £25,000.
• Postgraduate Loan — 6% above about £21,000, and it stacks on top of an undergraduate plan.

Thresholds are revised every April, so treat these as the current-year figures rather than permanent ones. If you are unsure which plan you are on, your online student-finance account or a recent payslip will tell you.

A worked example

Say you are on Plan 2 (threshold ~£28,470) earning £38,470. You repay 9% of the £10,000 above the threshold — about £900 a year, or £75 a month. That is on top of Income Tax and National Insurance, so a graduate on £38,470 keeps noticeably less than a non-graduate on the same salary. If you also hold a Postgraduate Loan, a further 6% of income above ~£21,000 is added on top.

Why your take-home looks lower than expected

Many quick calculators ignore student loans entirely, so a graduate comparing a job offer against a generic figure can be caught out by £50–£150 a month. On the UK take-home pay calculatoryou can switch your plan on so the breakdown reflects what actually lands in your account — see, for instance, the £35,000 take-home page as a starting point and adjust for your plan.

The takeaways

Treat the repayment as a percentage of income above your plan’s threshold, not as a debt to clear — for most graduates, overpaying voluntarily makes little sense because the balance is written off eventually. When you compare salaries, always include your loan plan so you are comparing real take-home pay, not headline gross. For how the underlying tax is calculated, read how UK Income Tax & National Insurance work.