Breakdown
How it works
Repayments are 9% of income above the plan threshold, taken through PAYE like a tax; they depend on earnings, not the balance. Interest accrues (RPI-linked; Plan 2 up to RPI+3% by income). Anything unpaid is written off after 25 years (Plan 1), 30 years (Plans 2 and 4) or 40 years (Plan 5). Many Plan 2 graduates never clear the balance, so overpaying is usually pointless for them.
Formula
Worked example
Plan 2, £38,000 salary: (38,000 − 29,385) × 9% = £775 a year, £65 a month. With a £45,000 balance at 4.3% interest and 3% pay rises, the balance is not cleared in 30 years — about £45,000 repaid then written off.
Frequently asked questions
Should I overpay my student loan?
Only if you will clearly repay in full anyway (high earner, small balance, Plan 1/5). For most Plan 2 borrowers it is a 9% graduate tax for 30 years and overpayments are wasted.
Which plan am I on?
Plan 1: started before Sept 2012 (England/Wales) or Northern Ireland. Plan 2: England/Wales Sept 2012–July 2023. Plan 4: Scotland. Plan 5: England from Aug 2023. Check your SLC online account.
Do I repay while working abroad?
Yes. Tell SLC, and they set a country-specific threshold (e.g. UAE threshold is higher than the UK one because of living costs) and you pay them directly. Ignoring it adds penalties.
Does the loan affect my mortgage?
The monthly repayment counts as a committed outgoing in affordability, typically reducing borrowing by 10–15× the monthly amount. The balance itself is ignored.