Don’t let the April 6th paycheck be a surprise. Starting in the 2026/27 tax year, the first “Plan 5” graduates will begin repaying their loans at the new lower £25,000 threshold. Whether you are on the legacy Plan 1 or the new Plan 5, our calculator provides an instant, paycheck-accurate breakdown of your deductions.
How it works:
Take-Home Clarity: Get monthly, annual, and bonus-adjusted figures so you can budget with confidence.
Plan-Specific Logic: Automatically applies the 2026/27 thresholds for all UK loan types.
The “Bonus Month” Factor: See how a one-off performance bonus impacts your student loan deduction (and whether you’re eligible for a refund). Also see our income and bonus tax calculator tool.
Student Loan Repayments
Updated for the 2026/27 tax year. Calculate exactly what will be deducted from your paycheck for Plans 1, 2, 4, 5, and Postgraduate loans.
The “Real Terms” Winner: Plan 5 Interest Explained
For the first time since 2012, the government has removed the “real interest” element for new graduates.
- Plan 2 (The Old Way): Interest is set at RPI + up to 3%. This means that if you are a higher earner, your debt grows faster than inflation. Many graduates find that despite making £200/month payments, their total balance actually increases every year.
- Plan 5 (The New Way): Interest is strictly RPI only.
Why this matters: Because the interest matches inflation exactly, you will never owe more in “purchasing power” than you originally borrowed. In financial terms, your loan is interest-free in real terms.
Plan 5 vs. Plan 2: The 2026 Comparison
| Feature | Plan 2 (Started 2012–2023) | Plan 5 (Started Post-Aug 2023) |
| Interest Rate | RPI + 0% to 3% (Variable) | RPI Only (Fixed to Inflation) |
| Repayment Threshold | £29,385 (Frozen) | £25,000 |
| Write-off Period | 30 Years | 40 Years |
| Monthly Cost | Lower (Higher threshold) | Higher (Lower threshold) |
The Catch: The “Lifetime Cost” Trap
While the interest rate on Plan 5 is “fairer,” the government has balanced the books by changing two other rules:
- You start paying sooner: Because the threshold is £25,000 (vs £29,385), you will pay about £33 extra per month on a standard graduate salary compared to a Plan 2 borrower.
- You pay for longer: The 40-year term means most Plan 5 graduates will be paying their “graduate tax” until they are in their 60s.
The Result: Under Plan 5, the government expects 65% of students to pay back their loan in full, compared to only 27% under the old Plan 2. You might have a lower interest rate, but you are far more likely to actually clear the debt.
The “Bonus Month” Refund Hack
Did your April 2026 paycheck look a little light? If you received a one-off bonus or worked significant overtime this month, the Student Loans Company (SLC) likely took a 9% cut—even if your total annual salary is actually below the threshold.
The “Annual Catch-Up” Rule: Student loan deductions are calculated per pay period (weekly or monthly). If you earn over £2,083 in April (Plan 5) or £2,448 (Plan 2), a deduction is triggered automatically. However, if by April 5, 2027, your total yearly income is less than your plan’s threshold, you are entitled to a 100% refund of those deductions.
How to Claim Your Money Back:
- Wait for the Tax Year to End: You can’t claim mid-year. Wait until after April 5, 2027.
- Check Your P60: Ensure your total “Gross Pay” for the year is actually below your threshold (e.g., £25,000 for Plan 5).
- Contact the SLC: You can request a refund via the Online Repayment Service (ORS) on GOV.UK or by calling the Student Loans Company at 0300 100 0611.
- Proof of Income: Have your April 2026 payslip and your 2026/27 P60 ready.
Pro Tip: If you are very close to the threshold but just over it, you can’t claim a partial refund for the bonus month. The refund only applies if your total annual income stays under the limit.
