From 1 September 2026 to 31 August 2027 the applicable RPI figure for student loans is 4.1%. That is the rate on Plan 1, Plan 4 and Plan 5 loans. Plan 2 runs from 4.1% to 7.1% depending on income and postgraduate loans would be 7.1% — but both are held at a maximum of 6% for the 2026/27 academic year. None of that changes what you repay each month, because the announcement leaves the 2026/27 repayment thresholds untouched: £26,900 on Plan 1, £29,385 on Plan 2, £33,795 on Plan 4, £25,000 on Plan 5 and £21,000 on a postgraduate loan.
A-level results have just landed and the new interest rates take effect on 1 September, so this is the week the questions start. This guide covers which plan you are on, what comes out of your pay each month, why the headline interest rate matters far less than the balance on your statement suggests, the three-year Plan 2 threshold freeze starting in April 2027, and the narrow set of cases where paying extra is genuinely worth it.
What changed on 1 September 2026
The Department for Education published its student loan interest rates and repayment threshold announcement on 10 August 2026. Student loan interest is pegged to the Retail Prices Index recorded the previous March, and the applicable RPI for the year from 1 September 2026 to 31 August 2027 is 4.1%.
Plan 1 charges the lower of RPI (4.1%) or the Bank Base Rate plus 1% — 4.75% with Bank Rate at 3.75%. So Plan 1 borrowers pay 4.1%. Plan 5 is set at RPI only, so also 4.1%. Plan 4 in Scotland uses the same lower-of-two rule, which on this year’s numbers gives the same 4.1%.
Plan 2 and postgraduate (Plan 3) loans are the ones that would sting. Plan 2 normally runs on a sliding scale from RPI to RPI plus 3% — 4.1% to 7.1% this year, with RPI only at or below £29,385 and the full RPI plus 3% at or above £52,885 — and postgraduate loans sit at RPI plus 3% throughout. Both are capped. A written ministerial statement of 13 April 2026 confirmed the maximum interest rate on Plan 2 and Plan 3 loans is held at 6% for the 2026/27 academic year.
The 6% ceiling takes the place of the mechanism that normally does this job. The House of Commons Library briefing on interest rates and repayment thresholds explains that the DfE and the Welsh Government review student loan rates against comparable commercial loans every month and cap Plan 2, Plan 3 and Plan 5 interest to that Prevailing Market Rate where it is lower, calendar month by calendar month. For 2026/27 the flat 6% cap replaces that market-rate cap on Plan 2 and Plan 3 — a fixed ceiling for the whole year rather than a monthly recalculation.
Two other numbers came out of the same announcement. The Plan 1 repayment threshold rises to £28,005 for the tax year 6 April 2027 to 5 April 2028. And the deferment threshold for the old mortgage-style loans, issued before 1998, is £44,311 for 1 September 2026 to 31 August 2027.
Which plan you are on
Almost every bad student loan argument starts with someone being on the wrong plan in their head. GOV.UK sets out which repayment plan you are on: it is decided by where you were funded from and when you started, not where you now live or work.
- England, course started on or after 1 August 2023 — Plan 5. This is the plan the class of 2026 will be on.
- England, started 1 September 2012 to 31 July 2023 — Plan 2.
- Wales, started on or after 1 September 2012 — Plan 2, including courses starting this autumn. Wales has not introduced Plan 5.
- England or Wales, started before 1 September 2012 — Plan 1.
- Scotland — Plan 4, undergraduate or postgraduate, whenever you studied.
- Northern Ireland — Plan 1, undergraduate or postgraduate.
- Master’s or doctoral loan from England or Wales — the Postgraduate Loan plan, sometimes called Plan 3.
Note the Welsh split. Plan 5 is an England-only plan: a Welsh student starting this September is on Plan 2, not Plan 5, on the same terms as a Welsh or English student who started in 2022. Wales also does not follow every English change afterwards — the threshold freeze below is the live example.
If you have two loans, you repay both
An undergraduate degree followed by a master’s means two loans running side by side, each with its own threshold. Someone with a Plan 2 loan and a postgraduate loan pays 9% above £29,385 and 6% above £21,000 — on a £40,000 salary, roughly £79 and £95 a month, a shade under £175 in total on our arithmetic.
What you actually repay each month
This is the number that matters, and it has nothing to do with your balance. Under the GOV.UK repayment rules you repay 9% of income above the threshold on Plans 1, 2, 4 and 5, and 6% above the threshold on a postgraduate loan. Below the threshold you repay nothing at all.
Deductions are taken through PAYE on each pay period, or through Self Assessment if you file a return, and stop automatically if you stop working or your income drops below the threshold.
A graduate on £35,000 pays £75 a month on Plan 5 and £42 on Plan 2 — same salary, same year, different decade of enrolment. A Scottish graduate on Plan 4 pays £9, because the Plan 4 threshold is nearly £9,000 higher than Plan 5’s. If you want to model your own salary, our loan repayment calculator will do the arithmetic.
Check the plan number printed on your payslip. Employers are told which plan to apply, and the wrong one produces a deduction that is too big or too small for years — the same category of quiet payroll error as a wrong tax code.
Every plan at a glance
| Plan | Who is on it | Threshold 2026/27 | Rate above it | Interest from 1 Sep 2026 | Written off |
|---|---|---|---|---|---|
| Plan 1 | England/Wales pre-Sept 2012; all Northern Ireland | £26,900 | 9% | 4.1% | 25 years after the April repayment was first due (age 65 for pre-2006 loans) |
| Plan 2 | England, Sept 2012 to July 2023; Wales, Sept 2012 onwards | £29,385 | 9% | 4.1% to 7.1% by income, capped at 6% | 30 years after the April repayment was first due |
| Plan 4 | Scotland, all students | £33,795 | 9% | 4.1% (lower of RPI or base rate + 1%) | 30 years after the April repayment was first due (or age 65 if sooner, for loans taken before 1 Aug 2007) |
| Plan 5 | England, courses from 1 Aug 2023 | £25,000 | 9% | 4.1% | 40 years after the April repayment was first due |
| Postgraduate (Plan 3) | England/Wales master’s and doctoral loans | £21,000 | 6% | 7.1%, capped at 6% | 30 years after the April repayment was first due |
| Mortgage-style | Loans issued before 1998 | Deferment at £44,311 | Fixed instalments | 4.1% | Age 50 or 25 years, whichever is sooner (age 60 if 40 or over at the last loan agreement) |
The write-off column is doing more work than the interest column. GOV.UK’s guidance on when a student loan is written off is explicit: whatever is left on the date is cancelled. A loan is also cancelled if the borrower dies, once SLC has been sent the death certificate, so it is never a claim on an estate.
Why the interest rate matters less than you think
A six-figure balance on an SLC statement is alarming to look at, and for most people close to meaningless. This is not a normal debt. Nothing you owe changes what leaves your bank account, which is fixed at 9% or 6% of income above a threshold. Interest only decides whether you clear the balance before the write-off date.
The scale of that is in the government’s own numbers. DfE’s student loan forecasts for England, published 9 July 2026, expect around 55% of full-time higher education borrowers starting in 2025/26 and 2026/27 to repay in full — up sharply from about 32% of the 2022/23 Plan 2 cohort, because Plan 5 has a lower threshold and a 40-year term. The flip side is that roughly 45% of today’s new students will still have a balance written off.
For the millions on Plan 2 the picture is starker: on those forecasts around two-thirds never clear the balance, so the interest rate is an accounting entry on a number that will be deleted. The House of Commons Library’s student loan statistics briefing puts the outstanding stock at around £295 billion at the end of March 2026, with the 2023 leaving cohort entering repayment in April 2026 owing an average of £47,900. Large numbers — but this behaves like a time-limited graduate contribution collected through payroll, not like a credit card.
Where it does bite is affordability. The deduction reduces your take-home pay, and a mortgage lender assessing what you can service sees that smaller figure — a real cost, and the same size whether your balance is £20,000 or £120,000.
Worried about a balance that keeps growing?
For most graduates the monthly deduction is the only figure that changes anything — and it is set by your salary, not your statement.
Explore GetSmartSaver →The Plan 2 threshold freeze, and what it will cost
Here is the change that will actually take money out of graduates’ pockets, and it got a fraction of the attention the interest rate did. Announced at the November 2025 Budget, the Plan 2 threshold for borrowers from England rose to £29,385 from April 2026 and is then frozen at that level for three years from April 2027.
The mechanism is simple. Because you repay 9% of everything above the threshold, every £1,000 the threshold fails to rise costs anyone earning above it £90 a year. If wages and prices rise at, say, 4% a year while the threshold stands still, the gap reaches roughly £3,670 by the third year — about £330 a year more in repayments than an uprated threshold would have produced. Those are our figures on that assumption, not a forecast.
It also drags more people into repaying: someone on £30,000 today repays £55 a year on Plan 2, but hold the threshold flat through a few years of pay rises and that becomes a few hundred. The Treasury Committee concluded in July 2026 that the government has a moral obligation to reverse the freeze, noting the threshold was originally promised annual uprating in line with earnings and has now been frozen across three separate periods.
Two important qualifications. The Welsh Government has said it will not apply the freeze to borrowers from Wales, so an English and a Welsh Plan 2 graduate on identical salaries will start repaying different amounts from April 2027. And Plan 5’s £25,000 threshold, held flat since launch, is intended to rise annually in line with RPI from April 2027.
When paying extra makes sense — and when it does not
GOV.UK is unusually blunt about this. Its page on making extra repayments warns that “you might not benefit from making extra repayments because your loan will be written off at the end of the loan term”, and states plainly: “You cannot get a refund of any extra repayments you make.” That is a one-way door.
The cases where overpaying works
- You are confident of clearing the balance anyway. High and reliably rising earnings — medicine, law, finance, senior engineering — mean you will repay in full and every extra pound removes real interest at up to 6%.
- Your balance is small relative to your income. A short course, a partial loan, or a Plan 1 balance from the 2000s that is already nearly gone.
- A postgraduate loan alongside a big salary. Postgraduate loans are charged RPI plus 3% at every income level — capped at 6% this year, the same ceiling a high-earning Plan 2 borrower hits — and run for 30 years, so they are the first thing to clear if you are going to clear anything.
The cases where it is money thrown away
- You are on Plan 2 with average earnings. On DfE’s forecasts most of that cohort never repays in full, so an overpayment simply reduces a balance that was going to be cancelled.
- You are on Plan 5 and unsure. Forty years is a long horizon and 55% is not a comfortable margin either way. Overpay only once your career trajectory is clear.
- You have any other debt. Credit cards, overdrafts and car finance almost always charge more than 6% once any promotional period ends, and none of them get written off.
- You have no emergency fund. Money paid to the SLC cannot come back. Cash in an easy-access account can.
The same logic applies to parents. If you are weighing paying down a child’s loan against saving for them, the tax-free wrapper usually wins on flexibility — our guide to the best Junior ISAs covers the options, and if you are earlier in the journey, the running total in our breakdown of back-to-school costs for 2026 is a reminder of how much lands before university does.
Refunds, mistakes and the things worth checking
Plenty of people repay money they never owed. GOV.UK’s page on getting a refund lists the main cases: your annual income for the tax year was below the threshold for your plan, you started repaying before you needed to, your employer used the wrong plan, or you have paid more than you owe. Refunds are only processed after the SLC has confirmed your income with HMRC at the end of the tax year.
The below-threshold case catches irregular earners hardest. Deductions are worked out per pay period, so a bonus month or a short spell of high-paid contract work can trigger repayments even though your income for the whole year came in under the line. That money is reclaimable, but only if you ask.
Two other checks. Repayments start the April after you leave your course at the earliest, so anything deducted before that is refundable. And under the 2026 to 2027 terms and conditions, you must tell the SLC if you move abroad for more than three months and keep your contact details current — a loan you have lost touch with still accrues interest.
What to do this month
Starting university this autumn means Plan 5: £25,000 threshold, 9% above it, 4.1% interest, 40-year term. Nothing is due until the April after you finish, and the balance you accumulate matters far less than the salary you end up on.
If you are already repaying, do three things. Confirm the plan number on your payslip matches the plan you are actually on. Check in your SLC account that the rate applied from 1 September is the one your plan should be charging. And if you are on Plan 2 in England, build the April 2027 freeze into your budget, because the repayment line will creep up faster than your pay rise suggests.
What almost nobody needs to do is treat the balance as an emergency. It is a payroll deduction with an end date, and for roughly half of borrowers the end date arrives before the balance does.
Frequently Asked Questions
What is the student loan interest rate from September 2026?
For 1 September 2026 to 31 August 2027 the applicable RPI is 4.1%. Plan 1, Plan 4 and Plan 5 loans are charged 4.1%. Plan 2 runs from 4.1% to 7.1% depending on income and postgraduate loans would be 7.1%, but both are capped at 6% for the 2026/27 academic year.
What are the student loan repayment thresholds for 2026/27?
For the tax year to 5 April 2027: Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000 and Postgraduate Loans £21,000. You repay 9% of income above the threshold on Plans 1, 2, 4 and 5, and 6% on a postgraduate loan. Plan 1 rises to £28,005 in April 2027.
How much will I repay each month on a £35,000 salary?
Using the 2026/27 thresholds, roughly £75 a month on Plan 5, £70 on a postgraduate loan, £60 on Plan 1, £42 on Plan 2 and £9 on Plan 4. Those are our calculations on a £35,000 gross salary. Deductions are worked out per pay period, so bonuses can push a single month higher.
When is a student loan written off?
Plan 2, Plan 4 and postgraduate loans are cancelled 30 years after the April you were first due to repay, though a Plan 4 loan taken before 1 August 2007 goes at 65 if that comes first. Plan 5 runs for 40 years. Plan 1 loans taken from 1 September 2006 are written off after 25 years; earlier Plan 1 loans are cancelled when you turn 65. Any remaining balance simply disappears.
Should I pay off my student loan early?
Usually not. DfE forecasts only about 55% of students starting in 2025/26 and 2026/27 will repay in full, and roughly 32% of the 2022/23 Plan 2 cohort. GOV.UK warns you cannot get a refund of extra repayments. Overpaying makes sense mainly for high earners certain to clear the balance.
What does the Plan 2 threshold freeze mean for me?
From April 2027 the Plan 2 threshold for English borrowers is frozen at £29,385 for three years, so pay rises push more of your income into the 9% band. Every £1,000 the threshold does not rise costs £90 a year. The Welsh Government has confirmed it will not apply the freeze.
Last reviewed: August 2026. Interest rates apply from 1 September 2026 to 31 August 2027; repayment thresholds are for the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027. Figures are taken from the Department for Education, GOV.UK and House of Commons Library publications current at the time of writing. Rules differ by nation: Scottish students are on Plan 4, Northern Irish students on Plan 1, and the Welsh Government has said it will not apply the Plan 2 threshold freeze. This article is general information, not personal financial advice — check your own position with gov.uk and your Student Loans Company account, or get free help from Citizens Advice or MoneyHelper, before acting on it.
