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Tier 2 · StabiliseM21

Student Loans

~16 minNot started
Watch out:Complete 80% of Tier 1 to unlock the quiz, tools and XP for this module. You can still read the lesson.
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1

It's not a normal debt

You repay 9% of income above your plan's threshold (6% for postgraduate), taken automatically through payroll. If your income drops, repayments drop; if you stop earning, they stop. It doesn't appear on your credit file.

Tip:Think of it as a time-limited "graduate contribution", not a loan that follows you like a credit card.
2

Which plan are you on?

2026/27 thresholds: Plan 1 £26,900, Plan 2 £29,385, Plan 4 (Scotland) £33,795, Plan 5 £25,000, Postgraduate £21,000. Your payslip shows your plan. Example: Plan 2 earning £35,000 → 9% of (£35,000 − £29,385) ≈ £505/year (about £42/month).

GOV.UK — repaying your student loan
3

Interest vs repayment

Interest (linked to RPI) changes how fast the balance grows but not your monthly payment. For many people the balance is irrelevant, because it's written off before they ever clear it.

Key figure

Plan 0 loans are written off after 40 years; Plan 2 after 30. Most Plan 2/5 borrowers never repay in full.

4

Should you overpay?

Usually no — overpaying only helps if you're a high earner certain to clear the loan before write-off. For most people, voluntary overpayments are money given away.

Watch out:This is education, not advice — model your own situation before overpaying.

Read-only preview — the quiz and XP unlock with the tier.