For most Plan 5 graduates, April 2026 is when the loan stops being an abstract number on a statement and starts appearing on payslips. The calculator above shows the deduction at today's salary. This guide is about the longer view, because a Plan 5 loan behaves less like a debt you pay off and more like an extra tax on your earnings that lasts for decades.
How the repayments work
You repay 9% of everything you earn above £25,000 a year. The deduction is taken through PAYE alongside income tax and National Insurance, so you never make a payment yourself, and it stops automatically when the loan is cleared or written off. Earn below the threshold and you repay nothing for that period; your balance simply carries on.
The amounts start small. A graduate on £28,000 repays £270 a year, about £22.50 a month. On £40,000 it is £1,350 a year, about £112.50 a month. Because the threshold is a fixed amount rather than a percentage, the repayment grows faster than your salary: a 43% rise in pay from £28,000 to £40,000 multiplies the repayment by five.
Why Plan 5 lasts longer than Plan 2
Plan 5 has a lower threshold than Plan 2 (£25,000 against £29,385) and a longer term. Any balance left is written off 40 years after the April after you finish your course, compared with 30 years for Plan 2. Together these mean most Plan 5 borrowers will make repayments for much more of their working lives, and far more of them will repay the loan in full.
In return, the interest is gentler. Plan 5 interest is set at the Retail Prices Index, with no extra percentage on top, whereas Plan 2 charges up to RPI plus 3% while you study and for higher earners. In practice that means the real value of a Plan 5 balance roughly stays still rather than growing. The loan doesn't snowball the way Plan 2 balances often do.
Should you overpay?
For Plan 2 the answer is usually no, because most borrowers never repay in full and anything paid above the minimum simply reduces the amount written off. Plan 5 is less clear-cut. If your career is likely to keep your salary well above the threshold for decades, you will probably clear the loan in full anyway, and overpaying brings that date forward and saves interest.
But the saving is modest, because the interest only tracks inflation. Money used to overpay can't then go into a pension, where it gets tax relief, or a Stocks and Shares ISA, where it has historically grown faster than inflation. Overpaying also can't be undone if your plans change. A career break, part-time work, or a move into a lower-paid but more satisfying role could all mean you never repay in full, in which case any overpayment is money you didn't need to spend. For most graduates in their twenties, building an emergency fund and pension first, and revisiting the question later, is the safer order.
Common mistakes
The commonest one is assuming the loan affects your credit score or mortgage application the way a personal loan does. It isn't reported to credit reference agencies, although lenders do take the monthly deduction into account when they assess affordability. Another is forgetting to tell the Student Loans Company if you move abroad, where repayments are collected differently and fixed payments can apply. A third is paying twice: if you are self-employed as well as employed, check that Self Assessment isn't charging repayments on income that PAYE has already covered.
Next steps
Enter your salary above to see your Plan 5 deduction for 2026/27. If you also took a master's, the Plan 2 and Postgraduate loan calculator shows how two loans stack, and the main take-home pay calculator puts your repayment next to tax, National Insurance and pension.
For a longer walk-through, see our guide Plan 2 vs Plan 5: should you overpay?, which models when overpaying saves money.