If you earn above your plan's threshold, student loan repayments through your payslip are deducted by your employer straight from your gross pay through PAYE, you never have to arrange it yourself. You repay 9% of everything you earn over the threshold (6% for postgraduate loans), and the deduction shows as a separate line on your payslip below Income Tax and National Insurance.
It is not a fixed monthly bill. The amount flexes with your earnings each pay period, so a busy month with overtime or a bonus means a bigger deduction, and a quiet month means a smaller one, or none at all.
What Is the Student Loan Repayment Threshold for 2026/27?
You only repay on income above the threshold for your plan type. Here are the annual figures for the 2026/27 tax year, with the equivalent monthly point at which deductions begin.
| Plan | Annual threshold | Monthly threshold | Rate |
|---|---|---|---|
| Plan 1 | £26,900 | £2,241 | 9% |
| Plan 2 | £29,385 | £2,448 | 9% |
| Plan 4 (Scotland) | £33,795 | £2,816 | 9% |
| Plan 5 | £25,000 | £2,083 | 9% |
| Postgraduate Loan | £21,000 | £1,750 | 6% |
Which Repayment Plan Are You On?
Your plan depends on when and where you studied, not on how much you borrowed. Plan 5 applies to English students who started an undergraduate course on or after 1 August 2023, with the first repayments falling due from April 2026. If you are unsure which plan you are on, check your Student Loans Company online account or your starter checklist.
How Is the Payslip Deduction Calculated?
Repayments are worked out per pay period, not annualised across the year. For monthly-paid staff, your employer takes your gross pay for that month, subtracts the monthly threshold, and applies your rate.
Worked example, Plan 2, £36,000 salary:
- Monthly gross pay: £3,000
- Less Plan 2 monthly threshold: £2,448
- Income subject to repayment: £552
- Deduction at 9%: £49 (rounded down to the nearest pound)
That £49 sits on your payslip alongside your Income Tax and National Insurance. To see how all three deductions combine into your net pay, run the numbers through our take-home pay calculator.
Why Each Month Is Assessed Separately
Because every pay period stands alone, a one-off bonus can trigger a repayment even if your basic salary sits below the threshold. If a £4,000 bonus lands in a single month, that month's gross pay is tested against the monthly threshold, so you may see a large student loan deduction that month and nothing the next. PAYE does not reconcile this across the year to smooth it out.
Where Does the Student Loan Deduction Appear on Your Payslip?
Look for a line labelled "Student Loan" in the deductions column. If you also have a postgraduate loan, it appears as a separate "Postgraduate Loan" line, because the two are calculated independently and can run at the same time.
A typical deductions block reads, top to bottom: Income Tax (PAYE), National Insurance, Student Loan, Postgraduate Loan (if applicable), then any pension. Student loan repayments are taken from gross pay and do not reduce your taxable income, unlike pension contributions under a salary-sacrifice or net-pay arrangement.
Do You Pay Student Loan on Your Whole Salary or Just the Excess?
Only on the excess. The threshold is a genuine allowance: if your Plan 2 monthly pay is £2,448 or less, your deduction is zero. Cross it by £100 and you repay £9 (9% of £100), not 9% of the whole amount. This works the same way as the personal allowance for Income Tax, where the first £12,570 of income is tax-free in 2026/27.
When Do Student Loan Repayments Stop?
Your employer keeps deducting until HMRC tells them to stop, which happens when the Student Loans Company notifies HMRC that your balance is cleared. Because PAYE data can lag by a few weeks, many people overpay slightly at the very end, you can reclaim that directly from the SLC. Repayments also stop automatically if your earnings drop below the threshold, and any remaining balance is written off after a set period (40 years for Plan 5, 30 years for Plan 2, varying by plan).
What If You Are Self-Employed or Have Two Jobs?
If you are self-employed, repayments are collected through Self Assessment rather than your payslip, calculated on your total income for the year and paid alongside your tax bill each January.
With two PAYE jobs, each employer applies the threshold separately. That means you could earn £40,000 across two roles paying £20,000 each and have no student loan deducted, because neither job alone breaches the threshold. HMRC may reconcile this after the year-end, but it will not always catch it, so it is worth checking your own position.
Frequently Asked Questions
Do student loan repayments come out before or after tax?
Neither reduces the other, student loan repayments are calculated on your gross pay, the same figure used for Income Tax and National Insurance. The student loan deduction does not lower your taxable income, so you cannot use it to drop into a lower tax band.
Will a pay rise mean I lose a lot to student loan?
Only 9% of the amount above your threshold (6% for postgraduate loans), so a pay rise always leaves you better off overall. A £1,000 rise above the threshold costs roughly £90 a year in repayments, you keep the rest after tax and NI.
Can I see my student loan balance on my payslip?
No. Your payslip shows the deduction for that period only, not your outstanding balance. Log in to your Student Loans Company account online to view the running balance, the interest applied, and your full repayment history.
Does overtime increase my student loan deduction?
Yes. Overtime, commission and bonuses all count as earnings for that pay period, so any extra that pushes you over the monthly threshold is subject to the 9% (or 6%) deduction in the month it is paid.
Student loan deductions are one of the most misread lines on a UK payslip, and an easy place to overpay if you have multiple jobs, a leaving balance, or a bonus that skews a single month. If your numbers do not look right, or you would like a second pair of eyes on your payroll setup, get in touch with the Zmartly team and we will check it for you.
Source: Student loans: a guide to terms and conditions 2026 to 2027, GOV.UK
