How to calculate student loan repayments
Student loan repayments are a percentage of income above a threshold, not a percentage of the balance. If you earn below the threshold you repay nothing, and the amount you owe has no effect on the monthly deduction.
The rule
Monthly repayment = (annual income − plan threshold) × plan rate ÷ 12
Do it automatically — Student-loan repaymentStep by step
- 1Identify your plan type — it depends on when and where you started studying.
- 2Find the repayment threshold for that plan.
- 3Subtract the threshold from your income and multiply by the plan percentage.
- 4Divide by 12 for the monthly payroll deduction, and add a separate postgraduate loan deduction if you have one.
What trips people up
- • Payroll works it out per pay period, so a bonus month triggers a bigger one-off deduction.
- • Loans are written off after a set number of years, so overpaying is not always financially rational.
Common questions
Does interest change my monthly payment?
No — interest changes the balance and how long you repay, not the income-based deduction.
Do I repay while unemployed?
No. Repayments stop automatically when income falls below the threshold.
Skip the maths
Plan 1/2/4/5, Postgrad and US federal — see the monthly deduction from your pay.
Open the uk / ireland / us plans tool