The maths is simpler than almost anyone believes, and it has nothing to do with how much you owe. Here it is in full.
The formula
Monthly repayment = (your income − your plan’s threshold) × 9% ÷ 12. For a Postgraduate Loan, swap 9% for 6%. That is the whole calculation. Your balance, your interest rate and the size of your original loan play no part in it whatsoever.
Loan Summary
Career Scenario
| Year | Loan Balance | Total Repaid |
|---|
A worked example, payslip by payslip
You are on Plan 2, earning £35,000. The threshold is £29,385, so £5,615 of your income is above it. Nine percent of £5,615 is £505.35 a year, which payroll takes as £42.11 a month. If you got a £10,000 pay rise, the deduction would rise to £117.11 a month, because only the extra income above the threshold is ever counted.
| Step | Figure |
|---|---|
| Annual salary | £35,000 |
| Less Plan 2 threshold | −£29,385 |
| Income subject to repayment | £5,615 |
| × 9% | £505.35 per year |
| ÷ 12 | £42.11 per month |
How it is collected
If you are employed, your employer deducts it through PAYE alongside income tax and National Insurance, and pays it to HMRC. You do not set anything up and you cannot opt out. Payroll assesses each pay period separately against the monthly or weekly threshold, which is why a bonus month can trigger a deduction even when your annual salary is below the annual threshold.
If you are self-employed, it is calculated through your Self Assessment tax return and paid with your tax bill. Living abroad, you repay directly to the Student Loans Company against a threshold adjusted for the cost of living in your country.
Why interest never changes your monthly payment
This trips up nearly everyone. Interest inflates your balance, but your payment is a percentage of income, not of debt. A borrower owing £20,000 and one owing £80,000 on the same salary and plan pay exactly the same each month. Interest only determines whether you eventually clear the balance or reach the write-off date with money still outstanding. See the interest calculator for what that means for you.
What counts as income?
Gross pay before tax and National Insurance, but after salary-sacrifice pension contributions. It includes bonuses, overtime and most taxable benefits. Because salary sacrifice reduces the figure used, paying more into a pension that way genuinely lowers your student loan deduction.
If you have more than one plan
Two undergraduate plans mean one 9% deduction, calculated above the lowest threshold you hold. A Postgraduate Loan sits on top: its 6% is deducted in addition, so someone with Plan 2 and a Postgraduate Loan on £40,000 pays 9% above £29,385 and 6% above £21,000, a combined £174.61 a month.
Check the exact thresholds on the repayment thresholds page.
Frequently asked questions
Do I repay 9% of my whole salary?
No, and this is the most common misconception. You repay 9% of the amount above your threshold only. On Plan 2 at £30,000 that is 9% of £615, about £4.61 a month, not 9% of £30,000.
What if I change jobs mid-year?
Each employer assesses your pay against the threshold independently, so you may over- or under-repay across a year. You can reclaim any overpayment from the Student Loans Company.
Do repayments come out before or after tax?
They are calculated on gross pay, and deducted from your net pay alongside tax and National Insurance.
Verified against gov.uk. This is an estimate, not financial advice.