Student Loan FAQ

Answers to the questions most UK graduates ask about their student loan. Each answer sticks to the numbers and the mechanics. For your specific scenario, use the calculator.

Is university worth it?

Is university worth it financially in the UK?

The Institute for Fiscal Studies estimates the average lifetime earnings premium for a UK undergraduate degree is around £100,000 to £130,000 after tax and student loan repayments, compared to a similar person without a degree. The premium varies by subject: medicine, dentistry, economics, law, and engineering see the largest premiums (often £200,000+). Creative arts and some humanities subjects see modest or, in a small number of cases, negative premiums once 30+ years of Plan 5 repayments are included.

How much more do graduates earn than non-graduates?

According to ONS Labour Force Survey data, median full-time earnings for UK graduates aged 21–64 are around £38,000, compared to roughly £28,000 for non-graduates, a gap of about 35%. The gap is smaller in the early years of a career and widens with experience.

What’s the lifetime cost of a UK student loan?

On Plan 5 (England, started from August 2023), the typical graduate earning a graduate-level salary will repay roughly £40,000 to £80,000 over the 40-year term. On Plan 2 (England and Wales, 2012 to 2023 starters), most graduates will repay between £20,000 and £60,000 before the 30-year wipe. Use the calculator to see what your specific salary and debt produce, the spread between plans and earning brackets is large.

Does the subject I study affect the cost-benefit?

Yes. Medicine, dentistry, economics, mathematics, and engineering graduates typically earn enough to clear their loan in full, sometimes within 15–20 years. Creative arts, social care, and some humanities graduates more often reach the 40-year write-off without clearing the balance, paying 9% of earnings above the threshold for the full term. The IFS subject-by-subject report has the detailed numbers per subject.

Will I ever pay back my student loan in full?

The Department for Education’s most recent estimates suggest around 20–30% of Plan 5 borrowers will repay their loan in full before the 40-year write-off. For Plan 2, approximately half of borrowers are projected to reach the 30-year write-off without clearing the balance. Whether a specific scenario falls in the “clears in full” or “hits write-off” group depends on the earnings trajectory, use the calculator with your own numbers to see.

About UK student loans

Which UK student loan plan am I on?

Your plan depends on when and where you started your course:

Plan 1: English and Welsh students who started before September 2012, plus all Northern Ireland borrowers. Plan 2: English and Welsh students who started between September 2012 and July 2023. Plan 5: English students who started on or after 1 August 2023. Postgraduate Loan: Master’s and doctoral students in England and Wales (separate from the undergraduate loan and repaid concurrently).

What’s the difference between Plan 2 and Plan 5?

Three numbers change. Threshold: Plan 2 starts repayments at £27,295 of salary, Plan 5 starts at £25,000, so Plan 5 borrowers begin repaying at a lower salary. Interest: Plan 5 is RPI only (currently 3.2%) at every income level. Plan 2 is on a sliding scale by income, from RPI (3.2%) at or below £27,295 up to RPI + 3% (6.2%) at or above £49,130, with linear interpolation in between. Write-off: Plan 2 wipes after 30 years, Plan 5 after 40 years.

The combined effect of the lower threshold and longer term is that Plan 5 borrowers typically pay for an additional decade compared to Plan 2 at the same income. Plan 2’s headline 6.2% rate only applies to higher earners, so for graduates earning between the two thresholds the effective rate is lower than the headline. Compare the two plans at your own numbers using the calculator.

How is the student loan interest rate set?

It varies by plan and updates every September. Plan 1: the lower of RPI or Bank of England base rate + 1% (currently 3.2%). Plan 2: sliding scale from RPI (3.2%) at or below £27,295 to RPI + 3% (6.2%) at or above £49,130, with linear interpolation for incomes in between. Plan 5: RPI only (currently 3.2%) regardless of income. Postgraduate: RPI + 3% (currently 6.2%) regardless of income. Rates for September 2025 to August 2026 are published on gov.uk.

Does interest accrue while I’m at university?

Yes. Interest starts the moment you receive your first loan instalment, not when you graduate or when you start repaying. For a three-year degree at maximum tuition and maintenance loans, the balance at graduation is typically £3,000 to £8,000 higher than the amount actually borrowed.

Repayments

When do I start repaying my student loan?

The April after you finish or leave your course, but only if you’re earning above the threshold for your plan. If you’re below the threshold (£25,000 on Plan 5, £27,295 on Plan 2, £24,990 on Plan 1, £21,000 on Postgrad), no repayment is taken that month, regardless of how much you earn in other months.

How is my repayment calculated?

For Plan 1, Plan 2, and Plan 5: 9% of earnings above the threshold. So on a £35,000 Plan 2 salary, you pay 9% of (£35,000 − £27,295) = 9% of £7,705 = £693 per year, or about £58 per month. For the Postgraduate Loan, the rate is 6% above £21,000. If you have both an undergrad loan and a postgrad loan, they’re collected together, 9% above your undergrad threshold plus 6% above £21,000, simultaneously.

How is the repayment actually taken from my salary?

If you’re employed, your employer takes it via PAYE alongside Income Tax and National Insurance, it appears as a separate line on your payslip. If you’re self-employed, repayment is calculated and paid through Self Assessment alongside your tax bill.

Can I overpay my student loan?

Yes. One-off and regular voluntary payments can be made directly to the Student Loans Company via your online account. The effect on total cost depends on whether the projected balance reaches zero before the write-off term, the calculator shows both scenarios at the current inputs.

When is my student loan written off?

Plan 1: 25 years after the April you became liable to repay (or at age 65, whichever comes first). Plan 2: 30 years. Plan 5: 40 years. Postgraduate: 30 years. Whatever balance remains at the end of the term is cancelled, it doesn’t carry over, doesn’t become inheritable, and doesn’t get sold to a debt collector.

Life situations

What happens to my student loan if I move abroad?

You still owe it. The Student Loans Company sets a country-specific repayment threshold based on the cost of living, and you report your income directly to them rather than via PAYE. Failing to report or repay can lead to a £246 monthly fixed repayment being applied and, in serious cases, debt collection. Full rules on gov.uk.

What happens to my student loan if I die or can’t work?

The debt is cancelled on death, it doesn’t pass to your estate, partner, or family. If you become permanently unable to work for medical reasons, you can apply to have the loan written off on disability grounds (the rules differ from claiming PIP , see gov.uk’s cancellation page).

What happens if I earn under the threshold?

No repayments are taken that month. On Plan 2 and Postgraduate Loans interest still accrues, so the balance grows. On Plan 5 and Plan 1 interest also accrues but at the lower RPI rate. If your income drops below the threshold mid-year (e.g. you switch employers), your new employer will simply stop deducting student loan repayments via PAYE.

Does my student loan affect my mortgage application?

Mortgage lenders assess affordability based on net take-home pay. Student loan repayments come out of gross salary via PAYE, so the amount taken home is lower than it would be without the loan. On a £35,000 salary with Plan 2, the monthly deduction is roughly £58. On £60,000 with Plan 2, it’s around £246. The exact effect on borrowing capacity depends on the lender’s affordability model.

Does my student loan show on my credit report?

No. UK student loans aren’t visible on Experian, Equifax, or TransUnion credit files, and they don’t affect your credit score directly. They only affect mortgage and large-loan applications through the take-home-pay route described above.

Postgraduate decisions

What does the Postgraduate Loan add to my total repayments?

A Postgraduate Loan runs alongside your undergraduate loan, not in place of it. If you have both, repayments stack: 9% above your undergrad threshold plus 6% above £21,000 for the postgrad loan. On a £40,000 salary with both Plan 2 (£27,295 threshold) and Postgrad (£21,000 threshold), that’s 9% of £12,705 + 6% of £19,000 = roughly £2,283 per year, or £190 per month.

If I do a Master’s, do I have to pay back the postgrad loan?

Same rules as the undergraduate loan: repayment only when earning above the £21,000 threshold, 6% of earnings above that, written off after 30 years. Department for Education projections show many Postgraduate Loan borrowers reach the 30-year write-off without clearing the balance. Model both loans together using the calculator.