Student Finance Repayment Thresholds Explained
Understanding when you start repaying your student loan and how thresholds protect lower earners.
What is a repayment threshold?
The repayment threshold is the minimum salary at which you begin making student loan repayments. Earn below this amount, and you pay nothing. Earn above it, and you pay a percentage on the amount over the threshold.
ℹ️Key concept
Current thresholds (2025/26 tax year)
| Plan | Annual Threshold | Monthly Threshold | Weekly Threshold |
|---|---|---|---|
| Plan 1 | £26,065 | £2,172 | £501 |
| Plan 2 | £28,470 | £2,372 | £548 |
| Plan 4 | £32,745 | £2,728 | £630 |
| Plan 5 | £25,000 | £2,083 | £481 |
| Postgraduate | £21,000 | £1,750 | £404 |
These thresholds are updated annually, usually in April, based on inflation and government policy. The values shown above are for the 2025/26 tax year.
📝Note on Plan 5
How repayments are calculated above the threshold
Once you earn above your threshold, you pay a fixed percentage on everything above that amount:
ℹ️Formula:
Monthly repayment = (Annual salary - Threshold) × Rate% ÷ 12
Example 1: Just above threshold
Plan: Plan 2
Salary: £30,000
Threshold: £28,470
Above threshold: £1,530
Monthly repayment: £11
(£1,530 × 9% ÷ 12)
Example 2: Well above threshold
Plan: Plan 4
Salary: £45,000
Threshold: £32,745
Above threshold: £12,255
Monthly repayment: £92
(£12,255 × 9% ÷ 12)
What counts as "income" for the threshold?
Your repayments are based on your gross income before tax, but there are important nuances:
✅✓ Included in calculations
- Base salary
- Bonuses
- Overtime pay
- Commission
- Taxable benefits
ℹ️✓ Reduces your repayable income
- Pension contributions (via salary sacrifice)
- Childcare vouchers (if salary sacrifice)
- Cycle to work schemes
- Other salary sacrifice arrangements
💡Pro tip:
Salary sacrifice reduces your repayable income, meaning lower student loan deductions. This is one reason pension contributions are especially valuable for student loan borrowers. See our salary sacrifice guide.
What if I have multiple jobs?
If you're an employee on PAYE, Student Finance normally treats each job separately. That means each employer applies the threshold to the pay they report, it's handled per payslip rather than by combining earnings across jobs.
The "Double threshold" effect
Job 1: £20,000/year → No deductions (below Plan 2 threshold of £28,470)
Job 2: £20,000/year → No deductions (below threshold)
Combined income: £40,000/year
Outcome: Total repayment can be £0 because PAYE applies the threshold separately to each job.
Heads up: Bonuses, one‑off payments or a large overtime pay may push a single payslip above the threshold and trigger a deduction for that pay period, even if your annual salary would not normally require repayments. These temporary deductions can sometimes be corrected via payroll or HMRC refunds.
Important exception: If you are required to file a Self-Assessment tax return (for example, because you're self-employed, have rental income, or are a high earner), HMRC will calculate repayments on your total combined income for the year, and you may need to make a manual repayment to cover any shortfall.
See our multiple jobs guide for detailed instructions.
What if I earn below the threshold?
If you earn below your threshold:
- You pay nothing, no deductions from your salary
- Interest still accumulates on your loan balance
- No penalties for not paying
- This can continue indefinitely until write-off
Good news: Many borrowers spend years below the threshold without any consequences. Your loan will eventually be written off after 25-40 years (depending on your plan) regardless of how much you've repaid.
How thresholds change over time
Repayment thresholds are reviewed annually and usually increase with inflation, though not always:
Recent Plan 2 threshold history
2025/26: £28,470
2024/25: £27,295
2022/23: £27,295 (frozen)
2021/22: £27,295 (frozen)
2020/21: £26,575
Frozen thresholds during high inflation periods effectively mean more people start repaying and existing borrowers pay more in real terms.
The Postgraduate threshold has been frozen at £21,000 since 2016, which, in real terms, has pushed many postgraduate borrowers into repayment over time.
See full historical data: Threshold History
Threshold differences between plans
Why do thresholds vary between plans?
- Policy changes: Government priorities shift over time
- Regional differences: Scottish loans (Plan 4) have higher thresholds to reflect free tuition
- System reforms: Plan 5 lowered thresholds to recover more from borrowers
- Cost recovery: Lower thresholds mean more repayment, higher thresholds mean more write-offs
Impact: A Plan 5 borrower earning £27,000 makes monthly repayments while a Plan 4 borrower at the same salary pays nothing. Your plan type significantly affects take-home pay at mid-range salaries.
Key takeaways
You only pay on income above the threshold, not your total salary
Thresholds vary significantly by plan (£21,000 to £32,745)
Salary sacrifice can reduce your repayable income
Multiple jobs require careful management to avoid underpaying
Earning below threshold has no penalties, interest still applies but no repayments needed