Student loan repayments in England are not a fixed monthly bill. You only repay once your income passes a set threshold, and that threshold depends on which repayment plan you are on.
Two thresholds are worth knowing about for 2026 and 2027: one for Plan 2 borrowers and one for the newer Plan 5.
Which plan are you on?
Your repayment plan is set by when you started your undergraduate course in England, not by how much you borrowed.
- Plan 2 applies if you started an undergraduate course in England or Wales on or after 1 September 2012 and before 1 August 2023.
- Plan 5 applies if you started an undergraduate course in England on or after 1 August 2023.
Postgraduate loans (Plan 3) have a separate threshold and are not covered here.
If you are not sure which plan you are on, the government's student finance repayment service can confirm it.
What are the thresholds?
Plan 2
The annual repayment threshold for Plan 2 is £29,385 for the 2026/27 tax year. The government confirmed this figure would then be frozen for three years from April 2027.
That means no repayments are taken if your income stays below £29,385. Above that level, 9% of the amount over the threshold is taken through the Pay As You Earn (PAYE) system, in the same way as tax and National Insurance.
Plan 5
Plan 5 has a lower threshold of £25,000 per year, which applies from April 2026.
The 9% rate is the same as Plan 2, but because the threshold is lower, repayments begin at a lower income level.
A simple payslip example
A simple way to see the difference is to compare two graduates earning the same salary.
Suppose both earn £32,000 a year (roughly £2,667 a month before deductions).
Plan 2 graduate:
- Threshold: £29,385
- Income above threshold: £32,000 − £29,385 = £2,615
- Annual repayment: 9% of £2,615 = £235.35
- Monthly deduction: approximately £19.61
Plan 5 graduate:
- Threshold: £25,000
- Income above threshold: £32,000 − £25,000 = £7,000
- Annual repayment: 9% of £7,000 = £630
- Monthly deduction: approximately £52.50
At the same salary, the Plan 5 graduate repays roughly two and a half times more each month than the Plan 2 graduate. The important bit is that neither repays anything on income below their respective threshold.
Why does this matter?
The threshold is the figure your employer uses to calculate your monthly deduction. If your income sits close to either threshold, a pay rise, a bonus, or overtime could bring you into repayment, or increase what you repay.
For Plan 2 borrowers, the three-year freeze from April 2027 means the threshold will not rise with average earnings during that period. If wages increase but the threshold stays fixed, more of your income falls above the line.
Who may be affected?
- Recent graduates on Plan 2 earning between roughly £25,000 and £34,000, where the threshold difference between the two plans is most visible.
- Students who started in 2023 or later (Plan 5) who are approaching or have just passed the £25,000 mark.
- Anyone taking on extra work or a pay rise who wants to know whether their take-home pay will change.
The thresholds described here apply to employed earners. Self-employed borrowers repay through Self Assessment using the same percentages and thresholds, but the timing differs.
What to read next
For a broader look at borrowing as a young person, including how student loans interact with other credit decisions, see our guide:
Sources
- UK Government, Student loan repayment thresholds and guidance: [uk-government]