If you started university in England or Wales between 2012 and 2023, you're on Plan 2. Once your income exceeds Ā£28,470 per year (2026/27 threshold), 9% of everything above that threshold is automatically deducted from your pay each month via PAYE.
The exact calculation
Monthly threshold: Ā£28,470 Ć· 12 = Ā£2,372.50. If you earn Ā£3,000/month, you repay 9% of (Ā£3,000 ā Ā£2,372.50) = 9% of Ā£627.50 = Ā£56.48 that month.
This appears on your payslip as a separate line ā usually labelled "Student Loan" or "SLC." It's calculated on your gross pay before income tax but deducted from your net pay.
What happens if your income varies month to month?
The deduction is calculated monthly. If you earn less than Ā£2,372.50 in any given month, no repayment is taken that month ā even if your average annual salary would normally require repayments. This is different from income tax, which is calculated cumulatively.
When does it get written off?
Plan 2 loans are written off 30 years after the April you were first due to repay (typically the April after graduation). They're also written off if you become permanently disabled or pass away. Most graduates on Plan 2 will never fully repay their loan ā the write-off is the expected outcome for lower and middle earners. This changes the calculus on voluntary overpayments significantly.
Should you make voluntary repayments?
Only if you're confident you'll fully repay the loan within 30 years. For most people, voluntary repayments reduce a balance that will be written off anyway. The money is better directed toward a pension (where you save tax) or other savings. High earners who calculate they'll repay in, say, 10 years may benefit from overpaying to avoid a further 20 years of 9% deductions.
Use our student loan calculator to see exactly what you repay each month and model different salary scenarios.