Quick Answer
UK student loans from the Student Loans Company do not appear on your credit file and are only repaid when you earn above the repayment threshold. This guide explains Plan 1, Plan 2, and Plan 5 differences, overpayment risks, and evidence-based repayment strategies.
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UK student loans are not like regular debt — and understanding how they actually work could save you thousands of pounds in unnecessary overpayments. This guide explains how to pay off student debt UK — in plain English — so you can make the right financial decision for your situation in 2026.
How to Pay Off Student Debt UK: Understanding the Repayment System
Student loans in the UK are repaid through your salary — not on a fixed monthly schedule. You repay 9% of everything you earn above the repayment threshold, and nothing if your income falls below it. The Student Loans Company (SLC) collects repayments automatically via HMRC, in the same way as income tax — so it comes straight off your payslip before you even see it.
Crucially, your student loan does not appear on your credit file. This means it has no direct impact on your credit score and will not affect your ability to get a mortgage or credit card in the way that consumer debt would.
Plan 1, Plan 2 and Plan 5: Which Plan Are You On?
Which repayment plan you are on depends on when and where you studied. Getting this wrong is one of the most common mistakes students make when trying to pay off student debt UK.
| Plan | Who it applies to | 2026 Threshold | Write-off |
|---|---|---|---|
| Plan 1 | Started in England/Wales before Sep 2012, or Scotland/NI at any time | £24,990/year | Age 65 or 25 years |
| Plan 2 | Started in England/Wales Sep 2012–July 2023 | £27,295/year | 30 years |
| Plan 5 | Started in England from Aug 2023 onwards | £25,000/year | 40 years |
| Postgraduate | Masters or Doctoral loan | £21,000/year (6%) | 30 years |
Most current UK undergraduates are on Plan 5. If you started your degree in England from September 2023 onwards, this is your plan — and it has the longest write-off period of any plan.
When Do You Start Repaying?
Repayments begin the April after you graduate or leave your course — but only if you earn above your plan’s threshold. If your income drops below the threshold at any point (part-time work, career break, redundancy), repayments pause automatically. You do not need to contact the SLC to stop them.
If you are self-employed, you declare student loan repayments through your Self Assessment tax return rather than via your payslip. Either way, the same question applies: does it make sense to pay off student debt UK faster than the automatic schedule?
How Much Will You Repay Each Month?
The formula is straightforward: you repay 9% of your income above your plan’s threshold.
Repayment Example (Plan 2, £35,000 salary)
- Threshold: £27,295
- Income above threshold: £35,000 − £27,295 = £7,705
- Annual repayment: 9% × £7,705 = £693
- Monthly repayment: ~£58/month
On Plan 5 (threshold £25,000), the same salary produces a monthly repayment of ~£75/month — slightly higher because the threshold is lower. Understanding your monthly figure is the first step in deciding whether to pay off student debt UK early or redirect surplus income elsewhere.
Interest Rates on Student Loans in 2026
- Plan 1: Lower of RPI or Bank of England base rate + 1%
- Plan 2: RPI + up to 3% (income-linked once working)
- Plan 5: RPI only — no income-linked premium
- Postgraduate Loan: RPI + 3%
Plan 5 borrowers pay the lowest interest rate of all plans because the Government removed the income-linked premium. This is better for borrowers while studying — but the 40-year write-off period means the total duration of the loan is significantly longer.
When Is Your Student Loan Written Off?
This is the most important fact in this guide: the majority of UK graduates will never fully repay their student loan. The outstanding balance is automatically cancelled after the write-off period regardless of how much remains — you owe nothing after that point.
The Institute for Fiscal Studies estimates that approximately 70% of Plan 5 graduates will not repay their loan in full before the 40-year write-off. This fundamentally changes whether making overpayments makes financial sense.
Should You Overpay Your Student Loan?
Most financial advice gets this wrong. Whether you should make voluntary overpayments to pay off student debt UK early depends entirely on whether you are likely to repay the full balance before write-off. If you are not projected to clear it, every pound you overpay is money you would not otherwise have had to repay. For an independent take, MoneySavingExpert’s student loan myths guide sets out the same logic in detail.
When Overpaying Makes Sense
- You are on Plan 1 with a small remaining balance and a high income — you will almost certainly repay in full, so reducing interest saves money
- You are a consistently high earner on Plan 2 (e.g. doctor, solicitor, finance professional) and projections show you will clear the balance before year 30
- You have already maximised your ISA allowance and have no higher-interest debt
When Overpaying Does Not Make Sense
- You are on Plan 5 — the 40-year write-off means the majority of graduates will pay more overall by overpaying than by letting the loan run its course
- You have credit card debt, an overdraft, or other higher-rate debt to clear first
- You have not yet used your annual Stocks and Shares ISA allowance — a broad index fund returning 7–9% annually is likely to outperform the effective interest cost of your loan
Student Loan and Your Mortgage
Student loans do not appear on your credit report with Equifax, Experian, or TransUnion. However, mortgage lenders will factor in your monthly repayment during affordability assessments — because it reduces your take-home pay. On a £35,000 salary on Plan 2, the ~£58/month repayment will reduce your maximum borrowing by roughly £5,000–£15,000 depending on the lender’s model. It is rarely a dealbreaker, but worth knowing about before you apply.
5 Practical Steps to Pay Off Student Debt UK in 2026
- Check your plan and balance — log in at gov.uk/repaying-your-student-loan to see your current balance, plan type, and repayment history. Many graduates don’t know which plan they are on.
- Treat it like a tax surcharge — you pay 9% of income above a threshold, automatically. That mindset removes the psychological pressure to “clear the debt” at all costs.
- Invest the difference instead — if overpaying doesn’t make mathematical sense for your plan, redirect spare cash into a Stocks and Shares ISA. Long-term compounding almost always beats the student loan interest rate.
- If you move abroad, notify the SLC immediately — overseas graduates must make repayments directly to the SLC based on local earnings. Missed repayments can accumulate. Contact the SLC before you leave.
- Check your payslips, especially in year one — employer errors in student loan deductions are more common than people realise. If the deduction looks wrong, contact HMRC to confirm the correct plan and threshold.