Estimate your monthly student loan repayments under the Pay As You Earn scheme.
Enter your gross annual income before tax.
Plan 1
Plan 2
Plan 4
Plan 5 (Post-2012, England & Wales)
Postgraduate Loan
Select the type of student loan you have.
This is the income level above which repayments begin for your selected loan plan.
This is the percentage of your income above the threshold that you repay.
Results copied successfully!
Your Estimated PAYE Repayments
£0.00
Income Above Threshold (£)£0.00
Annual Repayment (£)£0.00
Annual Income (£)£0.00
Formula Used:
Monthly Repayment = ( (Annual Income – Repayment Threshold) / 12 ) * (Repayment Rate / 100)
Repayments are only made if Annual Income exceeds the Repayment Threshold.
Monthly Repayment vs. Annual Income
Student Loan Repayment Plan Details
Loan Plan
Repayment Threshold (£)
Repayment Rate (%)
Plan 1
22,015
9%
Plan 2
27,295
9%
Plan 4
25,000
9%
Plan 5
25,000
9%
Postgraduate
21,000
6%
Understanding Your PAYE Student Loan Repayments
{primary_keyword}
Understanding how much you need to repay on your student loan is crucial for effective financial planning. The Pay As You Earn (PAYE) system, often referred to in relation to student loans, ensures that your repayments are directly linked to your income. This means you only start making repayments once you earn above a certain threshold, and the amount you pay is a percentage of your income that exceeds that threshold. This flexible approach prevents borrowers from being overburdened by repayments during periods of lower income. This {primary_address} calculator is designed to give you a clear, real-time estimate of your monthly obligations.
What is a PAYE Student Loan Calculator?
A {primary_keyword} is a specialized financial tool designed to help UK student loan borrowers estimate their monthly and annual repayments under the government's income-contingent repayment schemes. These schemes, commonly known as 'Pay As You Earn' (PAYE) because deductions are made directly from your salary by your employer, ensure that repayments are manageable and proportionate to your earnings. This calculator simplifies the often complex calculations involved, providing instant, clear figures based on your income and the specific student loan plan you are on.
Who Should Use This Calculator?
Individuals with UK student loans (all plans: Plan 1, Plan 2, Plan 4, Plan 5, and Postgraduate Loans).
Those whose income fluctuates and want to understand how their repayments will change.
Prospective graduates trying to budget and plan their finances post-university.
Anyone who has recently started a new job and wants to estimate their student loan deductions.
Common Misconceptions About PAYE Student Loans:
"It's like a normal loan with fixed monthly payments." This is incorrect. PAYE student loan repayments are variable and depend entirely on your income.
"I'll be repaying forever." While it can feel that way, most loans have a maximum repayment term (e.g., 30 years for Plan 1, 2, 4, 5). Any outstanding balance is then written off. Postgraduate loans have a shorter term.
"If I don't earn enough, I don't have to repay." While you won't make *compulsory* repayments if your income is below the threshold, the loan still accrues interest.
"The interest rate is crippling." Interest rates vary by plan and are often linked to inflation. While they can be higher than some other loans, the income-contingent nature makes them manageable.
{primary_keyword} Formula and Mathematical Explanation
The calculation for your monthly PAYE student loan repayment is based on a straightforward formula, designed to be fair and proportional to your earnings above a specific threshold. The core principle is that a percentage of your income *above* the threshold is collected each month.
Step-by-Step Derivation:
Identify Applicable Values: Determine your Gross Annual Income, the Repayment Threshold for your specific loan plan, and the Repayment Rate for your plan.
Calculate Income Above Threshold: Subtract the Repayment Threshold from your Gross Annual Income. If your income is below the threshold, this value is zero, and no repayment is due.
Calculate Annual Repayment: Multiply the 'Income Above Threshold' by the Repayment Rate (expressed as a decimal).
Calculate Monthly Repayment: Divide the Annual Repayment by 12.
Variable Explanations:
Variable
Meaning
Unit
Typical Range
Gross Annual Income
Your total income from employment or self-employment before any deductions (including tax or National Insurance).
£
15,000 – 100,000+
Repayment Threshold
The minimum annual income level above which student loan repayments begin. This varies by loan plan.
£
21,000 – 27,295
Repayment Rate
The percentage of your income *above* the threshold that is collected as a loan repayment. This also varies by plan.
%
6% or 9%
Income Above Threshold
The portion of your annual income that exceeds the repayment threshold.
£
0 – Varies
Annual Repayment
The total calculated student loan repayment over a full year.
£
0 – Varies
Monthly Repayment
The estimated student loan repayment deducted from your monthly salary.
Crucially, this calculation only applies if Annual Income > Repayment Threshold. Otherwise, the monthly repayment is £0.00.
Practical Examples (Real-World Use Cases)
Let's look at how the {primary_keyword} works in practice:
Example 1: Standard Plan 1 Borrower
Scenario: Sarah has a Plan 1 student loan and earns a gross annual salary of £28,000.
Loan Type: Plan 1
Annual Income: £28,000
Repayment Threshold (Plan 1): £22,015
Repayment Rate (Plan 1): 9%
Calculation:
Income Above Threshold: £28,000 – £22,015 = £5,985
Annual Repayment: £5,985 * (9 / 100) = £538.65
Monthly Repayment: £538.65 / 12 = £44.89
Calculator Output:
Monthly Repayment: ~£44.89
Income Above Threshold: £5,985.00
Annual Repayment: £538.65
Annual Income: £28,000.00
Interpretation: Sarah's monthly student loan repayment is £44.89. This is a manageable amount deducted directly from her salary, reflecting a fair contribution based on her earnings.
Example 2: Postgraduate Loan Borrower
Scenario: Ben has a Postgraduate Loan and earns £35,000 annually.
Loan Type: Postgraduate Loan
Annual Income: £35,000
Repayment Threshold (Postgraduate): £21,000
Repayment Rate (Postgraduate): 6%
Calculation:
Income Above Threshold: £35,000 – £21,000 = £14,000
Annual Repayment: £14,000 * (6 / 100) = £840.00
Monthly Repayment: £840.00 / 12 = £70.00
Calculator Output:
Monthly Repayment: £70.00
Income Above Threshold: £14,000.00
Annual Repayment: £840.00
Annual Income: £35,000.00
Interpretation: Ben will repay £70.00 per month towards his Postgraduate Loan. The lower rate (6%) reflects the different funding structure for postgraduate studies.
How to Use This PAYE Student Loan Calculator
Using our {primary_keyword} is simple and designed for quick, accurate estimations. Follow these steps:
Enter Your Annual Income: Input your gross annual income (before tax) into the "Annual Income (£)" field. This is the most critical input for determining your repayment amount.
Select Your Loan Type: Choose the correct student loan plan from the dropdown menu (Plan 1, Plan 2, Plan 4, Plan 5, or Postgraduate). This selection automatically updates the relevant repayment threshold and rate shown.
Review Threshold and Rate: The calculator displays the corresponding Repayment Threshold and Repayment Rate for your chosen loan type. You can see these details update as you change your loan plan.
Calculate: Click the "Calculate Repayments" button. The results will update instantly.
How to Read Results:
Primary Result (Monthly Repayment): This is the main figure shown in large, green text. It represents your estimated monthly student loan deduction.
Income Above Threshold: Shows how much of your annual income is subject to repayment.
Annual Repayment: Your total estimated student loan payments over the year.
Annual Income: Confirms the income figure you entered.
Decision-Making Guidance:
Budgeting: Use the monthly repayment figure to budget effectively, ensuring you account for this deduction from your take-home pay.
Financial Planning: Understand how future income increases or decreases will impact your repayment obligations. For example, a promotion might increase your monthly payment, but it also signifies higher earnings.
Comparison: Compare repayment figures across different loan plans if you're unsure which one applies to you, although your specific loan agreement dictates this. Remember, these are estimates; your actual payroll deductions are definitive.
Don't forget the 'Copy Results' button, which allows you to easily save or share your calculated figures. The 'Reset' button will revert the calculator to its default settings.
Key Factors That Affect PAYE Student Loan Results
Several factors influence the amount you repay under the PAYE student loan system. Understanding these can help you better anticipate your financial situation:
Gross Annual Income: This is the primary driver. Higher income directly leads to higher repayments, as more of your earnings will fall above the threshold. Conversely, lower income reduces or eliminates repayments.
Student Loan Plan Type: Each plan (1, 2, 4, 5, Postgraduate) has a different repayment threshold and, for Postgraduate loans, a different rate. Plan 5, for instance, has a later repayment trigger and a longer repayment period compared to earlier plans.
Repayment Threshold: This is the income level that acts as the 'breakeven' point. Any income earned *below* this is not subject to repayment. Thresholds are usually reviewed annually by the government, potentially increasing each year.
Repayment Rate: The percentage applied to income above the threshold. The standard rate for undergraduate loans is 9%, while Postgraduate loans are typically 6%. A higher rate means faster repayment of the loan balance, assuming income remains constant.
Interest Accrual: While not directly part of the monthly repayment calculation, the interest added to your loan balance significantly affects the total amount you owe over time and how long it takes to repay. Interest rates vary by plan and can be higher than inflation, especially for higher earners. Explore our student loan interest calculator for more insight.
Employer's Payroll System: Your employer's payroll software is responsible for deducting the correct amount based on information provided by HMRC. While generally accurate, errors can occur, making it important to check your payslips.
Tax and National Insurance: PAYE student loan deductions are made *after* income tax and National Insurance contributions have been calculated. This means your student loan repayment doesn't reduce your tax or NI bill, but it does impact your net take-home pay.
Self-Employment: If you are self-employed, you don't repay via PAYE. Instead, you declare your income to HMRC via Self Assessment, and your student loan repayment is calculated and paid as part of your tax bill. The thresholds and rates remain the same. See our guide on Self Assessment tax.
Frequently Asked Questions (FAQ)
How do I know which student loan plan I'm on?
Your loan agreement documentation or your student finance provider (e.g., Student Loans Company in the UK) will state your loan plan. Generally, Plan 1 is for students who started university before September 2012 in England or Wales, or before September 2006 in Scotland or Northern Ireland. Plan 2 is for students who started after these dates. Plan 4 is specific to Scotland, and Plan 5 is for England and Wales students who started on or after 1st August 2023. Postgraduate loans are separate.
What is the difference between gross and net income for repayment purposes?
For PAYE student loan calculations, your gross annual income is used – this is your income *before* any deductions like income tax, National Insurance, or pension contributions. Your net income (take-home pay) is what remains *after* these deductions.
Does the loan balance get written off?
Yes. For undergraduate loans (Plan 1, 2, 4, 5), any outstanding balance is typically written off 30 years after the April you were first due to make a repayment. Postgraduate loans have a shorter write-off period, usually 30 years from the April after you finished your course. This write-off applies regardless of whether you've paid off the loan in full by then.
What happens if my income drops below the threshold?
If your income falls below the repayment threshold, your employer's payroll will stop making student loan deductions. Repayments will automatically restart when your income rises above the threshold again.
Does interest continue to accrue on my loan?
Yes, interest is added to your student loan balance while you are repaying it. The rate depends on your loan plan and, for some plans, your income. This means you could end up repaying more than you originally borrowed, especially if your income is high or your loan term is long.
Can I make voluntary repayments to pay off my loan faster?
Yes, you can make voluntary repayments at any time. This is often beneficial if you have a high income and want to reduce the total interest paid over the life of the loan. You can make a lump sum payment or set up regular payments. Contact your student loan provider for details. Check out our student loan repayment strategy guide.
How are student loan repayments calculated for part-time work?
If you have multiple part-time jobs, your income from all sources is aggregated to determine your total gross annual income. Repayments are then calculated based on this total income and the relevant threshold. Your employer will make deductions based on the income *they* pay you, but HMRC reconciles this annually.
Is my student loan debt included in my credit report?
No, UK student loans issued by the government are generally not included in your credit report. Therefore, making repayments or having an outstanding balance typically does not affect your credit score. This differs from commercial loans or mortgages.