UK Student Loan Deductions — Plans 1, 2, 4 & 5 Explained

Student loan repayments in the UK are collected automatically via PAYE alongside income tax and National Insurance. Unlike tax, you only repay while earning above a threshold — and any remaining balance is written off after a set period.

Student Loan Plans 2026/27

Monthly Repayment Examples

Does Student Loan Reduce Your Tax?

No. Student loan repayments do not reduce your taxable income or NI liability. They are calculated on your gross earnings (or sometimes gross less pension depending on scheme type), after tax and NI are already determined. Think of it as a separate 9% graduate contribution rather than a tax.

Which Plan Are You On?

You can check your plan type in your online student finance account, or look at your payslip which should state the plan number. When starting a new job, you tell your employer your plan on the new starter checklist — HMRC then sends the correct start notice.

If you have multiple loans (e.g., undergraduate Plan 2 + postgraduate), both are collected simultaneously. They appear as separate deductions on your payslip.