How student loan repayments work for an employee
In shortRepayments are a percentage of income over your plan's threshold, taken from pay with tax and National Insurance, and Payment Plus counts as income.
GOV.UK defines income as what you earn, including bonuses and overtime, before tax and other deductions. The amount you owe, which is what you borrowed plus interest, has no impact on how much you repay each year.
If you are an employee, repayments are taken from your salary at the same time as tax and National Insurance, and your payslips show the amount deducted. The thresholds are different for each plan and depend on how often you are paid.
- Threshold amounts change on 6 April each year.
- The earliest you start repaying is the April after you leave your course.
- Repayments stop automatically if you stop working or your income falls below the threshold.
- Your contracted pay, including the unsocial hours allowance and any additional committed hours, is already above most thresholds from pay point 1, so repayments will be a standing monthly deduction.
- Variable pay such as Payment Plus is also counted, so it adds to the deduction in the month it is paid.
The calculation works pay period by pay period
GOV.UK says you will make a repayment if your income goes over the weekly or monthly threshold for your plan, for example if you are paid a bonus or overtime. You can ask for a refund at the end of the tax year if your annual income is less than the yearly threshold.
That matters most for lower-paid or part-year staff, and we return to it in the section on refunds. We do not know the exact payroll earnings measure used by HMPPS for each pay line, so check your payslip to see what is included.
The 2026/27 thresholds and rates
In shortFrom GOV.UK on 3 October 2026: Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000 and Postgraduate £21,000, at 9% (6% for postgraduate).
- Plan 5£25,000English students who started on or after 1 August 2023; lowest threshold
- Plan 4£33,795Highest threshold of the plans
- Postgraduate Loan£21,0006% rate, repaid on top of any undergraduate plan
The table below is taken from GOV.UK on 3 October 2026 and applies to the current tax year, which began on 6 April 2026. The Postgraduate Loan has its own lower threshold and rate and is repaid in addition to any undergraduate plan.
If you have both, you pay the postgraduate percentage on the income above the postgraduate threshold as well as the other plan's percentage on its own threshold.
| Plan | Yearly threshold | Monthly threshold | Weekly threshold | Rate on income above threshold |
|---|---|---|---|---|
| Plan 1 | £26,900 | £2,241 | £517 | 9% |
| Plan 2 | £29,385 | £2,448 | £565 | 9% |
| Plan 4 | £33,795 | £2,816 | £649 | 9% |
| Plan 5 | £25,000 | £2,083 | £480 | 9% |
| Postgraduate Loan | £21,000 | £1,750 | £403 | 6% |
If you have more than one plan type and no Postgraduate Loan, you repay 9% of income over the lowest threshold of the plans you hold (GOV.UK). Thresholds change each 6 April.
Interest is separate from repayments
Interest is charged separately from repayments and does not change what is deducted from your pay in a given month. Interest is applied even if you are not working or your income is below the threshold.
- GOV.UK currently shows 4.1% for Plan 1, Plan 4 and Plan 5.
- It shows 6% for a Postgraduate Loan.
- Plan 2 is on a variable rate based on income: 4.1% at £29,385 or less, up to 6% at £52,885 or more, and in between 4.1% plus up to 1.9%.
Which plan are you on?
In shortYou cannot choose your plan: it depends on where you applied and when you started, and you can hold more than one.
You cannot choose your repayment plan, and if you have more than one loan you can be on different plans. GOV.UK says the plan depends on where you applied and when you started.
Postgraduate master's and doctoral loans use the Postgraduate Loan plan.
- Student Finance England
- Course started before 1 September 2012: Plan 1. Between 1 September 2012 and 31 July 2023: Plan 2 for undergraduate courses, PGCEs and Advanced Learner Loans. On or after 1 August 2023: Plan 5 for undergraduate courses.
- Student Finance Wales
- Same pattern for undergraduates: Plan 1 before 1 September 2012 and Plan 2 afterwards.
- Student Awards Agency Scotland
- Everyone is on Plan 4.
- Student Finance Northern Ireland
- Everyone is on Plan 1.
If you are unsure
- Sign in to your online student loan account and download your active plan type letter.
- Show it to your employer if payroll has a different plan.
- If you have paid too much because you were on the wrong plan, you can get a refund (GOV.UK).
- Joiners should check the student loan line and plan type on their first payslips.
Why the plan matters on the same pay
Scottish graduate in HMPPS England
- Stays on Plan 4.
- Threshold of £33,795 is the highest of the plans.
- Repays much less than an English colleague on the same pay.
English colleague on Plan 5
- Threshold is £25,000.
- On the same pay, repays much more.
Worked examples: what comes out at each pay point
In shortAt pay point 1 on 37 hours (£34,928) a Plan 5 officer repays about £74 a month and a Plan 4 officer about £8; your payslip is the authority.
- Plan 5, £34,928About £74 a monthRoughly £893 a year
- Plan 4, £34,928About £8 a monthThreshold is £33,795
- 37h to 41h at pay point 1Extra £33 a monthOn Plan 2 and on Plan 5, at £39,334
The table shows the approximate monthly deduction for a National Band 3 officer at 2026/27 rates. It is the plan's percentage of (gross monthly pay minus the plan's monthly threshold), rounded down to the pound as GOV.UK does in its own examples. Gross monthly pay is the annual figure divided by twelve.
It is an approximation because we do not know exactly which payroll earnings figure HMPPS payroll applies. Pay progression and the annual award increase deductions in the same way, and the extra pay from longer hours is not all yours to keep.
| Annual pay | Plan 1 | Plan 2 | Plan 4 | Plan 5 | Postgraduate (6%) |
|---|---|---|---|---|---|
| £34,928 (pay point 1, 37h) | £60 | £41 | £8 | £74 | £69 |
| £36,778 (pay point 3, 37h) | £74 | £55 | £22 | £88 | £78 |
| £36,816 (pay point 1, 39h ACHP) | £74 | £55 | £22 | £88 | £79 |
| £38,766 (pay point 3, 39h ACHP) | £89 | £70 | £37 | £103 | £88 |
| £39,334 (pay point 1, 41h) | £93 | £74 | £41 | £107 | £91 |
| £40,876 (pay point 1, 37h, Inner London) | £104 | £86 | £53 | £119 | £99 |
Single-plan examples; if you also hold a Postgraduate Loan the postgraduate amount is on top. Approximation: gross annual pay divided by 12 minus the monthly threshold, times the rate, rounded down.
Payment Plus, overtime and the student loan: how much do you keep?
In shortYou keep about 72% of a taxable Payment Plus hour without a loan and about 63% with a 9% loan, so the loan lowers the value of extra hours.
- Without a loan72%About £16.56 of each £23 hour
- With a 9% loan63%About £14.49 of each £23 hour
- Postgraduate only (6%)About 66%Leaves £15.18 per hour
Payment Plus is £23 an hour from 1 April 2026, taxable, subject to National Insurance and not pensionable. For a basic-rate taxpayer that means 20% tax and 8% National Insurance, so you keep about £16.56 of each £23 hour.
A 9% student loan takes a further £2.07 per hour. Postgraduate repayments take 6% rather than 9%.
| Situation | Tax | NI | Student loan | You keep | Retention |
|---|---|---|---|---|---|
| No student loan (basic rate) | £4.60 | £1.84 | £0 | £16.56 | 72% |
| Plan 1, 2, 4 or 5 loan (9%) | £4.60 | £1.84 | £2.07 | £14.49 | 63% |
| Postgraduate Loan only (6%) | £4.60 | £1.84 | £1.38 | £15.18 | 66% |
Assumes your pay is above the plan threshold, you pay basic-rate tax (20%) and employee National Insurance at 8%, and the hour is not pensionable. Higher-rate taxpayers keep less. See our overtime and Payment Plus guides for tax treatment.
Worked example: 12 hours a month
Twelve hours a month of Payment Plus is £3,312 a year gross. Without a student loan the net gain is about £2,385.
With a Plan 2 or Plan 5 loan the additional deduction is 9% of £3,312, about £298 a year, leaving about £2,087. The repayment reduces your loan balance, though whether that is valuable depends on whether you would otherwise repay the whole loan before it is written off.
That is a financial decision we do not make for you, see the section on overpaying below.
Monthly timing
Because the deduction is worked out against the monthly threshold, a month with a lot of Payment Plus can lift that month's pay far above the average, and the deduction will rise accordingly.
If your annual income stays below the yearly threshold for your plan, you can reclaim the repayments after the tax year ends. That is unlikely for a typical Band 3 officer on any plan except Plan 4, but it can apply to lower-paid staff and part-year workers.
Refunds, wrong plan and Band 2 officers
In shortYou can ask for a refund only after the tax year ends and only if your annual income was below the yearly threshold for your plan.
GOV.UK says you can ask for a refund if you made repayments but your income over the whole tax year (6 April to 5 April) was below the yearly threshold for your plan, for example if a bonus put you over the monthly threshold for one month.
If you repay a combination of Plan 1, Plan 2 and Plan 4 loans, you can only get a refund if your income was below the lowest threshold.
- You cannot get a refund until the Student Loans Company has confirmed your annual income with HMRC, which does not happen until after the end of the tax year.
- You can only ask for tax years that have ended.
- If you suspect payroll has applied the wrong plan, ask HR or payroll to check, using the letter from your student loan account.
- You must tell the Student Loans Company if you leave the UK for more than three months, and you will be expected to keep repaying unless you can prove overseas income is below the threshold (GOV.UK).
Band 2 operational support grade
The 2026/27 national Band 2 salary including the temporary 25% unsocial hours allowance is £31,761 for 37 hours. That is under the Plan 4 threshold of £33,795 but above the Plan 1, Plan 2 and Plan 5 thresholds.
An OSG on Plan 4 would normally have no deduction, but overtime at the published rates could push a single month over the monthly threshold and trigger a deduction that is then refundable if the year ends below £33,795. Always check your payslip, and keep your P60.
For most serving officers the overseas point will be rare but, if you take a long career break abroad, it matters.
Mortgages, write-off dates and the overpayment question
In shortStudent loans are not on credit reports but can count in mortgage affordability, loans are written off after a fixed period, and whether to overpay is a decision for regulated advice.
GOV.UK says student loans do not appear on credit reports and do not affect your credit score, but lenders may consider them during affordability checks for other types of borrowing, such as a mortgage.
In practice the monthly repayment comes out of your pay, so it reduces your take-home pay and therefore the amount you can afford to repay on a mortgage. Tell your broker your plan type and monthly deduction, and see our mortgage guide for the other factors lenders look at.
- Plan 1 write-off
- 25 years after the April you were first due to repay, if your first loan was paid on or after 1 September 2006.
- Plan 2 write-off
- 30 years after that April.
- Plan 4 write-off
- 30 years after that April, if your first loan was paid on or after 1 August 2007.
- Plan 5 write-off
- 40 years after that April.
- Postgraduate Loan write-off
- 30 years after that April.
Should you overpay?
Because of these terms many borrowers will not repay the balance in full, which is why GOV.UK says you might not benefit from making extra repayments and suggests you speak to a financial adviser if unsure.
We cannot tell you whether to make voluntary overpayments, because it depends on your balance, your plan, your income path and your alternatives such as saving for a deposit.
If your priority is a house deposit, our first-time buyer guide explains the Lifetime ISA bonus, which is a certain return of 25% for qualifying purchases, while any benefit from overpaying a loan that may be written off is uncertain. Get regulated advice before a large overpayment.
- There is no penalty for paying some or all of your loan early.
- You cannot get a refund of extra repayments.
- You can choose how an extra payment is applied.
Common mistakes and a payslip checklist
In shortMost mistakes come from treating the deduction as a share of take-home pay, forgetting the plan sets the threshold, or chasing a refund that does not apply.
Use the steps below once a year, ideally after the April pay changes, to make sure the deduction is correct and that you understand how your overtime and extra hours are treated. For tax treatment of overtime generally, see overtime after tax and our take-home pay by band guide.
- Find your plan type in your online student loan account and note which plan letter you hold.
- Look at the student loan line on your latest payslip and divide it by 0.09 to estimate the income it implies above the threshold.
- Check that threshold against the GOV.UK table for the current tax year.
- If you have a Postgraduate Loan as well, check that both deductions appear.
- After a pay award or contract change, re-run the sum on the first payslip with the new pay.
- At the end of each tax year, compare your P60 total pay with the yearly threshold in case a refund applies.
- Keep your payslips and P60 for the years you made repayments.
Four common mistakes
The mistake
- Assuming the deduction is on take-home pay.
- Thinking the lender or the amount owed decides the threshold.
- Not checking what happens when your pay changes.
- Chasing a refund because the deduction felt high in a particular month.
The fact
- It is on income before tax and other deductions, which is higher, so the payslip figure may be larger than you guessed from net pay.
- The plan decides the threshold, so two officers on identical pay can repay very different amounts, one on Plan 5 and the other on Plan 4.
- A 3.5% pay award, a move to a 39 or 41-hour contract, promotion or a move to London all increase the deduction, because every extra pound over the threshold is charged at 9%.
- A refund is only available if your annual income was below the threshold.
Where the student loan sits among your other pay deductions
In shortThe student loan is a separate 9% (or 6%) charge on top of tax, National Insurance and pension, so it lowers the marginal value of extra hours.
A serving officer's payslip carries several deductions at once: income tax, employee National Insurance, the alpha pension contribution and, if you have one, the student loan. Each is calculated on a different basis, which is why net pay can be hard to predict.
Our guides on tax and National Insurance and the payslip explained walk through the lines.
- Pension: 4.6% of pensionable earnings up to £36,199 and 5.45% from £36,200 to £56,000 in 2026/27, taken before tax is applied.
- Tax and National Insurance follow the usual rules.
- Student loan: a separate 9% (or 6%) charge on income over your plan's threshold.
The combined effect
Take a National Band 3 officer at pay point 3 on 37 hours (£36,778). Modelled take-home with no student loan is about £28,396 a year, or £2,366 a month.
A Plan 2 deduction of about £55 a month reduces that to about £2,311, a fall of about 2.3%. The same officer on Plan 5 loses about £88 a month, reducing take-home to about £2,278.
These are modest compared with tax and pension but, because they are charged at 9% on each extra pound over the threshold, they make the marginal value of extra hours lower than it looks.
Decisions about extra duties
That marginal view is the one that matters for decisions about extra duties, a higher-hours contract or a promotion. The Payment Plus guide explains how the £23 rate is paid, and our pay progression guide covers movement through the three pay points.
The overtime to deposit calculator applies the tax and National Insurance retention to your own hours. If you hold a student loan, subtract a further 9% from the retention it shows, as in the table earlier in this guide.
Frequently asked questions
Do prison officers have to repay their student loan?
Yes, on the same rules as other employees: once your income is above the threshold for your plan, the repayment is taken from your pay at the same time as tax and National Insurance. GOV.UK sets the thresholds at £26,900 (Plan 1), £29,385 (Plan 2), £33,795 (Plan 4), £25,000 (Plan 5) and £21,000 (Postgraduate Loan).
A Band 3 officer's pay is above most of these from pay point 1.
Does Payment Plus count towards student loan repayments?
Yes. GOV.UK says your income for student loan purposes includes overtime and bonuses, before tax and other deductions. Each £23 Payment Plus hour attracts a 9% repayment on Plans 1, 2, 4 and 5, about £2.07, once your income is above the threshold.
After 20% tax and 8% National Insurance you keep about 63p of each extra pound.
Does my student loan affect getting a mortgage?
Student loans do not appear on credit reports or affect your credit score, but GOV.UK says lenders may consider them in affordability checks for borrowing such as a mortgage. The repayment also lowers your take-home pay. Tell your broker your plan type and the monthly deduction so they can include it correctly.
Which student loan plan am I on if I studied in Scotland?
GOV.UK says if you applied to the Student Awards Agency Scotland you are on Plan 4, whether you studied an undergraduate or postgraduate course. Plan 4 currently has the highest threshold, £33,795 a year. If you studied in Northern Ireland you are on Plan 1.
Check your plan letter in your student loan account and make sure payroll has the same plan.
Can I get a refund of student loan repayments?
Yes, if your income over the whole tax year was below the yearly threshold for your plan, for example because a one-off payment pushed a single month over the monthly threshold. SLC cannot confirm until HMRC has your annual income after the tax year ends.
You cannot get a refund of voluntary extra repayments. Keep your P60 and payslips.
Should I overpay my student loan or save for a deposit?
We cannot advise on this, because it depends on your plan, balance and income.
The facts are that there is no penalty for overpaying, extra repayments cannot be refunded, loans are written off after 25 to 40 years depending on the plan, and GOV.UK says you may not benefit from extra repayments. For regulated advice, speak to an FCA-authorised adviser before making a large overpayment.
Sources
- gov.ukGOV.UK: Repaying your student loan (thresholds, plans, write-off, refunds)
- prisonandprobationjobs.gov.ukHMPPS Prison and Probation Jobs: Prison officer pay
- assets.publishing.service.gov.ukPSPRB Twenty-Fifth Report on England and Wales 2026 (CP 1550), published 26 March 2026
- civilservicepensionscheme.org.ukCivil Service Pension Scheme: member contribution rates