How Student Loan Repayments Are Collected
Student loan repayments are not a tax, but they’re collected through the tax system. If you’re employed, your employer deducts repayments from your pay. If you’re self-employed, you repay through Self Assessment.[1]
Repayment Plan Thresholds
You only repay when your income exceeds the threshold for your plan:[2]
| Plan | Annual Threshold (2025/26) | Repayment Rate |
|---|---|---|
| Plan 1 (pre-2012 England/Wales, Scotland/NI) | £26,900 | 9% |
| Plan 2 (post-2012 England/Wales) | £29,385 | 9% |
| Plan 4 (Scotland post-2007) | £33,795 | 9% |
| Plan 5 (from 2023/24) | £25,000 | 9% |
| Postgraduate Loan | £21,000 | 6% |
Repayments are 9% of income above the threshold (6% for Postgraduate Loans).
Example (Plan 2): You earn £32,295. Income above threshold: £5,000. Annual repayment: 9% × £5,000 = £450 (around £37.50/month).
If You’re Employed
Your employer uses a code on your tax records (SL1, SL2, etc.) to deduct the correct amount from your pay automatically. Check your payslip to confirm repayments are being made.[1]
If You’re Self-Employed
Student loan repayments for the self-employed are calculated and collected through your Self Assessment return. The repayment is based on your total taxable income for the year, and is added to your bill when you submit your tax return online.[3]
Multiple Loans
If you have both an undergraduate and postgraduate loan, repayments are calculated separately. You could be repaying 9% + 6% = 15% of income above the respective thresholds.[4]
Overpayment & Final Year
If you’re close to paying off your loan, contact the Student Loans Company to switch to direct debit payments instead. Otherwise, you may overpay through PAYE or Self Assessment (refunds can take time).[1]
Repayments Are Not Tax-Deductible
Student loan repayments are not tax-deductible. They don’t reduce your taxable income and can’t be claimed as an expense.
Frequently Asked Questions
When do I start repaying my student loan?
You start repaying once your income exceeds the threshold for your plan type. For Plan 2 (post-2012 England/Wales), the threshold is £29,385 per year (2026/27). Repayments are 9% of income above the threshold.
How are student loan repayments collected if I am self-employed?
If you are self-employed, student loan repayments are calculated and collected through your Self Assessment tax return, based on your total taxable income for the year.
Are student loan repayments tax-deductible?
No. Student loan repayments are not tax-deductible and do not reduce your taxable income. They cannot be claimed as an expense.
What happens if I have both an undergraduate and postgraduate loan?
Repayments are calculated separately for each loan. You could repay 9% on the undergraduate loan and 6% on the postgraduate loan simultaneously, totalling up to 15% of income above the respective thresholds.
Further Reading
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Sources
- Repaying your student loan — GOV.UK
- Student loan repayment thresholds — GOV.UK
- Self Assessment: student loans — GOV.UK
- Postgraduate loan repayments — GOV.UK