A student loan repayment is 9% of the pay above your plan's threshold, or 6% above the Postgraduate Loan threshold. The threshold depends on the plan: £26,900 a year on Plan 1, £29,385 on Plan 2, £33,795 on Plan 4, £25,000 on Plan 5 and £21,000 on a Postgraduate Loan. Nothing comes off the pay below the threshold, and payroll applies the threshold for your pay period rather than the annual one.
Which plan you are on
Your plan was set when you took the loan out, by where you studied and when your course started, and it does not change because you moved or changed job.
Plan 1 covers students from England and Wales whose courses started before 1 September 2012, and students from Northern Ireland. Plan 2 covers students from England and Wales whose courses started on or after 1 September 2012 and before 1 August 2023. Plan 4 covers students funded in Scotland. Plan 5 covers students in England whose courses started on or after 1 August 2023. A Postgraduate Loan is separate from all of them and is repaid at its own rate, alongside whichever undergraduate plan you hold.
If you are not sure, your online student loan account and your annual statement both name the plan, and so does the deduction line on your payslip once repayments have started.
What actually comes off your pay
The repayment is a share of the pay above the threshold, not a share of all your pay, and not a share of what you owe. On £35,000 a year, Plan 2 takes £505 over the year, and a monthly payroll deducts £42 each month. The same salary on Plan 5 gives £900 for the year and on Plan 1 £729, because the thresholds sit at different points.
The earnings the threshold is applied to are the same gross pay your employer uses to work out its secondary Class 1 National Insurance contributions. That includes overtime, bonuses and commission, and it is taken before income tax and before a pension contribution made under the relief-at-source method.
Salary sacrifice is the exception that changes the figure, because sacrificed pay is never earnings in the first place. A pension contribution deducted after the earnings figure has been struck does not reduce the repayment; one you have given up salary for does.
Payroll uses the threshold for your pay period
This is where a calculator and a payslip most often part company. Payroll does not divide your annual threshold by twelve as it goes. HMRC publishes a threshold for each pay period, and those figures carry pence.
For 2026/27 the monthly thresholds are £2,241.66 on Plan 1, £2,448.75 on Plan 2, £2,816.25 on Plan 4, £2,083.33 on Plan 5 and £1,750.00 on a Postgraduate Loan. Weekly, Plan 2 is £565.09 and Plan 5 is £480.76.
The pence are the whole point. Rounding a monthly threshold to whole pounds moves it by up to 99p, and at 9% that is enough to change the repayment by a pound in either direction for anyone paid close to the line. Where a pay period is a multiple of a week or a month, HMRC's SL3 tables average the pay back to a weekly or monthly amount, work out the deduction on that, and multiply, rather than setting a threshold of their own.
The deduction is rounded down to a whole pound
Once the percentage has been applied, the pence in the answer are ignored. The regulations say that where a repayment includes pence as well as pounds, the pence are to be ignored, and HMRC's own Self Assessment notes say the same thing for the annual figure.
So a student loan line on a payslip is always a whole number of pounds, and twelve monthly deductions can come to slightly less than the repayment a whole year would produce. That gap is twelve round-downs rather than a mistake.
If you hold an undergraduate plan and a Postgraduate Loan at once, the two are worked out separately, each rounded down on its own, and then added. They are concurrent: the Postgraduate Loan repayment is additional to the undergraduate one rather than replacing it.
When repayments start, pause and stop
Repayments come out of any pay period in which your earnings are over the threshold for that period, which is why a single month with a large bonus can produce a deduction even when your annual salary is below the annual threshold. A quiet month below the threshold produces nothing, and the two do not net off against each other during the year.
Deductions stop when the loan is repaid or written off. The write-off point is set by the plan and the year you took the loan out, and it differs between plans, so your annual statement from the Student Loans Company is the place to read yours.
Payroll deductions are only the collection mechanism. What you owe, and the interest added to it, are handled by the Student Loans Company and sit outside PAYE entirely, which is why your payslip never shows a balance.
The Plan 2 threshold freeze
The Plan 2 threshold has been announced as frozen at £29,385 from 6 April 2027, covering 2027/28, 2028/29 and 2029/30. A frozen threshold with rising pay means more of your salary sits above the line each year, so the repayment grows without the rate changing.
The figures in this guide are the ones in force for 2026/27. An announced change is recorded in our rules file with its source and takes effect on the page the day it applies, rather than being written into the text now.
What if I have more than one undergraduate plan?
You repay at 9% over the lowest undergraduate threshold you hold, and only once. Two undergraduate plans do not mean two undergraduate deductions. A Postgraduate Loan is different, because it is not an undergraduate plan at all: it is repaid at 6% over its own threshold at the same time as the undergraduate one.
What if my payslip shows the wrong plan?
Tell your employer, and check what HMRC holds. A new employer learns your plan from your P45, your starter checklist or a notice from HMRC, and a missing answer on the starter checklist is the usual reason the wrong plan appears. Because the thresholds differ by thousands of pounds a year, the wrong plan can take a noticeably wrong amount every month, and putting it right is a payroll correction rather than a refund from the Student Loans Company.