Understand Your Payslip, Tax Code and PAYE / Lesson 6 of 8
Student loan deductions
Your annual income is below the threshold, but they still took a repayment. That is not a mistake.
The short answer
- ✓ You repay a percentage of income above your plan threshold, not of all income
- ✓ Deductions are worked out per pay period, so a bonus month can trigger one
- ✓ Over-deductions can be refunded but must be requested
- ✓ With two jobs the threshold is applied separately to each
Which plan are you on?
Your plan decides your threshold and your rate. It is set by when and where you studied, not by how much you borrowed.
| Plan | Threshold | Rate above it |
|---|---|---|
| £0 | £26,900 | 9% |
| £0 | £29,385 | 9% |
| £0 | £33,795 | 9% |
| £0 | £25,000 | 9% |
| £0 | £21,000 | 6% |
You only repay on income above the threshold, never on the whole amount. If you have both an undergraduate and a postgraduate loan, both are deducted, and they run alongside each other.
Deductions are per pay period
Like National Insurance and unlike income tax, student loan repayments are worked out on each pay period in isolation. Your annual total is irrelevant to the calculation in any given month.
Plan 2, threshold £29,385 a year, so about £2,449 a month
Normal month, pay £2,100 below the monthly threshold no deduction
Bonus month, pay £5,100 above it deduction taken
Annual income might still be under the threshold.
The deduction is still correct, and it is not refunded automatically.Getting an over-deduction back
If your total income for the year came in under the annual threshold but deductions were taken in individual periods, you can ask the Student Loans Company for a refund after the tax year ends. It is not automatic and most people never ask.
The bit nobody explains
Two jobs is the situation that catches people hardest. Each employer applies the threshold separately, so you can earn well above the threshold in total and have no deduction taken at all if neither job individually crosses it. That feels like a win, and it is not: the balance keeps accruing interest and the shortfall surfaces later.
The reverse also happens: two jobs that each cross the threshold deduct twice, which over-collects.
Common mistakes
- Assuming the threshold is annual for the calculation. It is applied per pay period.
- Not telling a new employer your plan type. The wrong plan means the wrong threshold.
- Never asking for an over-deduction refund. It has to be requested.
- Ignoring a loan close to being paid off. Switch to direct debit near the end or you will overpay.
Try it on your own numbers
This is the same calculator as the full tool page, using 2026/27 rates.
Your details
You repay a percentage of everything you earn above the threshold for your plan. Results update as you type.
Not sure which plan? It depends on where and when you started studying. England/Wales courses from Aug 2023 are usually Plan 5.
Postgrad loans repay above , on top of your main plan.
Used to estimate how long mandatory repayments would take (interest ignored - illustrative).
Student loan repayment
per year · a month
- Postgraduate Loan ()
- Per week
- Effective rate of salary
No repayment due
Your salary is below the threshold (), so nothing is collected this year.
You repay of the you earn above , plus your postgrad loan.
Illustrative payoff
At /yr, a balance would take about (ignoring interest).
Estimate only. Repayments are normally collected via PAYE and depend on monthly pay.
Repayment as your salary grows
How much you'd repay per year at salaries from £0 to £120k on your current plan.
| Plan | Threshold | Rate | Per year | Per month |
|---|---|---|---|---|
Postgraduate Loan repayments run in addition to an undergraduate plan, not instead of it.
Compare saved scenarios
| Scenario | Salary | Per year | Per month | |
|---|---|---|---|---|
Key takeaways
- ✓ You repay a percentage of income above your plan threshold, not of all income
- ✓ Deductions are worked out per pay period, so a bonus month can trigger one
- ✓ Over-deductions can be refunded but must be requested
- ✓ With two jobs the threshold is applied separately to each
Check you have got it
3 quick questions. No score is kept, and you can change your mind.
1. Your annual income is below the threshold but a bonus month triggered a deduction. Is that correct?
2. Do you repay a percentage of your whole income?
3. You have two jobs, neither individually above the threshold. What happens?
Sources
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