UK Student Loan Plans 2026/27 — Plan 1, 2, 4, 5, Postgrad

The first time a candidate I placed asked me “which student loan plan am I on?” was around 2018, and I had to admit I had no idea — there was just one plan back then, broadly speaking. Now there are five, the rules differ between countries, and the maths varies enough that two graduates with identical jobs can end up paying very different amounts each month.

This is the recruiter’s-eye view of UK student loans in 2026/27 — what the plans actually mean, how to check which one you’re on, and the practical implications for take-home pay, mortgage applications, and salary negotiation.

The five plans at a glance

Plan	Who	2026/27 threshold	Deduction rate	Write-off
Plan 1	England/Wales pre-Sept 2012	£26,065	9%	25 years after start of repayment
Plan 2	England/Wales Sept 2012–Aug 2023	£28,470	9%	30 years after start of repayment
Plan 4	Scotland (SAAS)	£32,745	9%	30 years after start of repayment
Plan 5	England Sept 2023+	£25,000	9%	40 years after start of repayment
Postgrad	England/Wales masters/PhD	£21,000	6%	30 years after start of repayment

See exactly what your loan deducts — run any salary through the UK take-home salary calculator with your plan selected, or use the dedicated UK Student Loan Repayment Calculator for a deeper breakdown.

How the plans differ in practice

Plan 1 — the pre-2012 cohort

Plan 1 covers anyone who started an English or Welsh undergraduate course before September 2012. The threshold (£26,065 in 2026/27) is the second lowest of the undergraduate plans, but the interest rate is far friendlier than Plan 2 — it’s RPI or the Bank of England base rate plus 1%, whichever is lower. Most Plan 1 graduates are in their late 30s or early 40s now and have been repaying for over a decade.

Practical implication: if you’re on Plan 1 and earning £35k, you’re paying 9% × (£35,000 − £26,065) = £804 a year in student loan deductions, or £67 a month. The write-off is 25 years after your repayment-start date, so many Plan 1 borrowers are within 5-10 years of the loan disappearing — paying it off early rarely makes sense.

Plan 2 — the £9k tuition fee era

Plan 2 covers English and Welsh students who started between September 2012 and August 2023. This is the cohort that paid the £9k/year tuition fees and racked up the largest balances — typically £45,000-£70,000 by graduation. The threshold is £28,470 in 2026/27.

Plan 2’s killer feature isn’t the threshold — it’s the interest rate, which can be RPI plus up to 3% during study and depending on income post-graduation. The headline balance grows fast. But most Plan 2 borrowers will not repay the full balance — current Office for Students projections suggest only around 17% will fully clear it before the 30-year write-off.

That last point is critical for paying-off-early decisions: if you’re a Plan 2 graduate earning a typical £35-50k and not on a high-flying trajectory, your projected lifetime repayments will be less than your outstanding balance. Voluntary lump-sum repayments are then a transfer to HMRC for nothing in return.

Plan 4 — the Scottish carve-out

Plan 4 was created in 2021 for Scottish students taking loans through SAAS. The 2026/27 threshold is £32,745 — by far the highest of any plan, reflecting Scottish Government policy that low-paid graduates shouldn’t be repaying. Below that threshold, no deduction. Above it, 9%.

The interest rate is RPI-only, no real-terms increase. Plan 4 is the most graduate-friendly of all UK student loan plans on a like-for-like basis.

Plan 5 — the post-2023 English cohort

Plan 5 came in for English undergraduates starting from September 2023. Two features distinguish it sharply from Plan 2:

1. Lower threshold: £25,000, frozen until 2027. Lower than every other undergraduate plan.
2. Longer write-off: 40 years instead of 30.

The combined effect is that more Plan 5 graduates will repay their loans in full than Plan 2 graduates — Office for Students projections suggest around 50%+. Practically, Plan 5 looks more like a graduate tax that lasts most of your working life.

Postgraduate Loan — the 6% line

The Postgraduate Loan covers masters and PhD-level study in England and Wales. Threshold £21,000, deduction 6% (not 9%), write-off 30 years.

Two important features:

1. Postgrad runs alongside an undergraduate plan. If you’re on Plan 2 + Postgrad, your payslip shows two separate deduction lines and you pay both. So a £45k earner with Plan 2 + Postgrad pays 9% × (£45,000 − £28,470) + 6% × (£45,000 − £21,000) = £1,488 + £1,440 = £2,928 a year, or £244 a month.
2. PGL is the only plan with a 6% rate. Postgraduate Loans aren’t part of the 9%-band logic — they sit outside it.

How to check which plan you’re on

Three places to look, in order of authority:

1. Student Loans Company online account at studentloanrepayment.co.uk. The dashboard shows your plan, balance, interest rate, and repayment history. This is the single source of truth.
2. Your payslip. The deduction line is usually labelled SLP1, SLP2, SLP4, SLP5 or PGL. The exact label varies by payroll software but the prefix is consistent.
3. HMRC Personal Tax Account at gov.uk/personal-tax-account. The PAYE section shows which plan HMRC is currently applying through your employer.

If the SLC and HMRC disagree, the SLC is correct. Call HMRC on 0300 200 3300 to fix the payroll deduction.

What I tell new joiners

In 12 years placing UK candidates, three things come up repeatedly when student loans intersect with new jobs:

One — first payslips after a job move often have the wrong plan or no plan at all. Your new employer’s payroll defaults to whatever HMRC last told them, which may be out of date. Always check the first 2-3 payslips and flag mismatches to HR/payroll early. Refunds for over-deductions come back through your wages, but only once HMRC processes the correction — that can take 1-2 months.

Two — plans matter for mortgage affordability, but less than people fear. Lenders treat the 9% (or 6%) deduction as a fixed monthly cost. On a £50,000 salary with Plan 2, that’s roughly £162/month off your borrowing capacity — typically reducing maximum mortgage by £30,000-£40,000. Brokers know which lenders are most generous on student-loan treatment; ask if you’re stretched.

Three — pension salary sacrifice reduces your student loan deduction. Sacrifice £5,000 of a £45k Plan 2 salary into pension and your gross drops to £40k. That cuts your annual student loan deduction by £450 (9% of £5k). Combine that with the income tax + NI saving and pension salary sacrifice becomes one of the highest-return moves a graduate earner can make in their 20s. (If the new job is also a step into a different industry, the swapping-sectors content set covers the offer-negotiation moves that interact with your loan plan and pension at the same time.)

Common questions

Why is my balance going up even though I’m repaying?

Plan 2 interest can outpace the 9% deduction at lower salary levels. If you’re earning £30k on Plan 2, your monthly deduction is £11.50 but your balance is accruing £200+ in interest. The balance grows. This is expected and built into the system — most Plan 2 borrowers won’t fully repay before the 30-year write-off.

Should I overpay my student loan?

For Plan 1, sometimes — if you’re close to the end of the 25-year clock. For Plan 2, usually no. For Plan 4 and Plan 5, run the numbers. The Money Saving Expert calculator is the cleanest available comparison.

Does my employer know what student loan I have?

Only the plan number, not the balance. HMRC tells employers through the tax code system which plan to apply (via a starter checklist or P45). Your employer doesn’t see what you owe.

What happens if I move abroad?

You still have to repay. The Student Loans Company has a separate overseas repayment scheme — you’ll be allocated a fixed monthly repayment based on your country’s earning bands. Don’t ignore the letters; they cap interest at the standard rate but charge penalties for non-engagement.

What if I’m self-employed?

Student loan repayments are calculated through Self Assessment instead of PAYE. The same thresholds and rates apply, but the deduction is based on your annual self-employment profit, declared through your tax return.

Related calculators

• UK net take-home calculator — pick your plan, see exact monthly net pay
• UK Student Loan Repayment Calculator — model long-term repayment projections
• UK Pay Rise Calculator — see how a £5k rise affects your loan deduction
• UK Salary Sacrifice Calculator — model pension sacrifice’s effect on student loan

The bottom line

Five plans, different thresholds, different rates. The system isn’t designed to be intuitive — it’s designed to ratchet repayment with income. The practical takeaways:

1. Know your plan. Check the SLC dashboard at least once a year.
2. Don’t overpay unless the maths works. For most Plan 2 / Plan 5 graduates, voluntary repayments are unrecovered.
3. Pension sacrifice reduces both income tax AND student loan deductions. If you have access to it and you’re not maxing out, that’s free money on the table.
4. Watch the first 2-3 payslips at every new job. Wrong-plan deductions are common and quick to fix if caught early.