UK student loan Plans 1, 2, 4, 5 and PGL compared
Understand how repayment plans are assigned, which 2026/27 payroll thresholds apply and why a postgraduate loan can be deducted at the same time.
The short answer
UK student-loan payroll deductions depend on the repayment plan HMRC tells the employer to operate, the earnings in that pay period and whether a postgraduate loan also applies. Salary does not choose the plan, and the plan with the lowest monthly deduction is not something a borrower can simply select.
2026/27 repayment thresholds
| Loan type | Annual reference threshold | Monthly threshold | Weekly threshold | Rate |
|---|---|---|---|---|
| Plan 1 | £26,900 | £2,241.66 | £517.30 | 9% |
| Plan 2 | £29,385 | £2,448.75 | £565.09 | 9% |
| Plan 4 | £33,795 | £2,816.25 | £649.90 | 9% |
| Plan 5 | £25,000 | £2,083.33 | £480.76 | 9% |
| Postgraduate | £21,000 | £1,750 | £403.84 | 6% |
The annual number is useful for orientation, but payroll normally uses the monthly or weekly threshold that matches the payment. For a multi-week earnings period, HMRC’s method averages the pay to a week, rounds the weekly deduction down to whole pounds, then multiplies it by the number of weeks.
Which plan are you on?
The answer usually depends on where you normally lived before the course, when the course began and the type of finance. Plan 4 is associated with Student Awards Agency Scotland loans, but Scottish Income Tax status does not itself select Plan 4. Plan 5 generally applies to eligible English undergraduate courses starting on or after 1 August 2023.
Rules contain exceptions and transitions. Check your Student Loans Company account, start notice or official plan guidance instead of relying on a short web summary.
Can two loans be deducted together?
Payroll can collect one undergraduate-plan deduction and a postgraduate-loan deduction at the same time. They use separate thresholds and rates. For example, pay above both thresholds can face 9% for the undergraduate plan plus 6% for the postgraduate loan on their respective excess amounts.
A £3,000 monthly-pay example
At £3,000 of monthly earnings, the model produces undergraduate deductions of £68 for Plan 1, £49 for Plan 2, £16 for Plan 4 and £82 for Plan 5. A postgraduate loan produces a separate £75 deduction. These are cash-flow examples for one period, not loan-balance advice.
What payroll deductions do not tell you
- The interest being added to the balance
- Whether the loan will be written off before full repayment
- Whether voluntary repayment is financially appropriate
- Overseas thresholds or Self Assessment treatment
- Refunds due after irregular or low annual earnings
Official sources
Estimate the deduction on your pay.
Compare all four undergraduate plans at one salary, then add a postgraduate loan if it applies.