Plan 2 Student Loan Repayment in the UK (2026 Guide)

Which loans are “Plan 2”?

If you started an undergraduate course in England or Wales on or after 1 September 2012, you are almost certainly on Plan 2. Scotland and Northern Ireland use different plans. Plan 2 loans are income-contingent: you repay 9% of earnings above the threshold, not a fixed instalment like a bank loan.

Use our Student Loan calculadora with your gross annual salary to see the annual repayment — then divide by 12 for a rough monthly figure.

The threshold and the 9% rule

Each tax year HMRC sets a repayment threshold (check the current figure on GOV.UK — it is usually updated every April). You pay nothing until your income exceeds that threshold. Above it, you pay 9p for every £1 of income over the line.

Example (illustrative only): if the threshold were £27,295 and you earned £37,295, the excess is £10,000 and your annual repayment would be 9% × £10,000 = £900.

Interest: why the balance can grow while you pay

Plan 2 interest is income-linked before the loan is cleared. High earners can pay more interest; lower earners may see part of the loan written off after 30 years. That is why comparing a Plan 2 balance to a mortgage balance misleads — think of it as a graduate contribution with a lifetime cap, not a traditional debt.

Should you overpay?

For most people, extra pension contributions or a house deposit beat overpaying Plan 2, because you might never repay the full nominal balance. If you are a very high earner on course to clear the loan before write-off, run the numbers with an independent adviser — we are not providing personal advice here.