Student Loan Guide UK 2026/27 · Plan 5 Repayments & Tuition Fees Explained

Updated April 2026 · 9 min read · Use the University Cost Calculator

Starting university is one of the biggest financial decisions you will make. Yet most students sign up for tens of thousands of pounds of debt without fully understanding how repayments work, how interest accumulates, or whether they will ever clear the balance. This guide cuts through the confusion and explains everything you need to know about the UK student loan system for 2026/27, with a focus on Plan 5 · the plan that applies to the majority of new English students who started from September 2023 onwards.

1 · The Real Cost of University

The headline figure most people quote is tuition fees. For 2026/27, English universities can charge up to £9,535 per year for home undergraduate students in England · an increase introduced from the 2025/26 academic year as part of the government's review of higher education funding. Over a standard three-year course, that is up to £28,605 in tuition fees alone.

But tuition is only part of the picture. The maintenance loan covers living costs such as rent, food, transport and course materials. Most students also take the maximum or near-maximum maintenance loan available to them. When you add three or four years of tuition loans and maintenance loans together, a typical graduate leaves university with £40,000 to £60,000 of student loan debt, and many students in London or on longer courses accumulate considerably more.

This sounds alarming, but it is vital to understand that a student loan in the UK is not like a personal loan or a mortgage. Repayments are tied to your income, not your debt balance, and any remaining balance is written off after a set period regardless of how much remains. Whether that makes it feel better or worse depends entirely on your future earnings.

2 · Understanding Student Loan Plans

The UK student loan system has multiple repayment plans, and the one you are on determines your repayment threshold, the write-off period and how interest is calculated. The key plans are:

• Plan 1: For students who started before September 2012 in England and Wales, or any year in Scotland and Northern Ireland (Scottish and Northern Irish students remain on Plan 1 or Plan 4). Repayment threshold £24,990 (2026/27), write-off at age 65 or 25 years after repayment was due to start.
• Plan 2: English and Welsh students who started between September 2012 and July 2023. Repayment threshold £27,295, interest linked to RPI plus up to 3% depending on income while studying and during working life, write-off after 30 years.
• Plan 4: Scottish students who took out a loan from SAAS. Threshold £31,395 (2026/27), write-off after 30 years.
• Plan 5: English students who started their course from August 2023 onwards. Repayment threshold £25,000, write-off after 40 years, interest at RPI only (no income-linked premium). This plan is the focus of most of this guide.
• Postgraduate Loan (PGL): A separate loan for master's and doctoral courses. Repayment at 6% of income above £21,000, separate to any undergraduate loan repayments.

If you are an English student starting in September 2023 or later, you are almost certainly on Plan 5. Checking your Student Finance England correspondence or your online account will confirm which plan you are on.

3 · Plan 5 Repayment Rules

Plan 5 repayments are straightforward once you understand the core mechanics. You repay 9% of any income above £25,000 per year (£2,083 per month). Below that threshold, you repay nothing. The threshold is frozen at £25,000 until at least 2027 and is then expected to rise in line with earnings.

Repayments are deducted automatically through the PAYE system if you are employed, in the same way as income tax and National Insurance. You do not need to budget separately or make manual payments · your employer takes the right amount before you receive your salary. If you are self-employed, you declare your income through Self Assessment and student loan repayments are calculated and collected alongside your tax bill.

The write-off period for Plan 5 is 40 years from the April after you leave your course. This is significantly longer than the 30 years applied to Plan 2, and it is one of the most controversial aspects of the new plan. For students starting in 2026, this means any remaining balance would be written off around 2066. Interest continues to accrue throughout, so balances can grow substantially for lower and middle earners during the repayment period.

4 · Maintenance Loan 2026/27

The maintenance loan is designed to cover your living costs while studying. Unlike tuition fees, which are paid directly to your university, the maintenance loan is paid into your bank account at the start of each term. The amount you can borrow depends on where you study and live, and on your household income.

Maximum maintenance loan amounts for 2026/27 are:

• Living away from home, outside London: £10,227 per year
• Living away from home, in London: £13,348 per year
• Living at home with parents: £8,171 per year

These are the maximum figures, available to students whose household income is £25,000 or below. As household income rises above this level, the amount reduces on a sliding scale. Students from households earning around £60,000 typically receive roughly 60% of the maximum. Above approximately £70,000 household income, the minimum loan applies (around £4,767 outside London for 2026/27).

It is worth noting that the maintenance loan rarely covers the full cost of student living, particularly in cities like London, Bristol, Manchester or Edinburgh where private rent alone can consume a large portion of the loan. Planning a realistic budget before you start is essential · see Section 8 for more on the maintenance loan versus actual living costs.

5 · Interest on Student Loans

One of the genuine improvements of Plan 5 over Plan 2 is the interest structure. Under the old Plan 2, interest was linked to RPI plus up to 3% while studying and then tapered between RPI and RPI+3% based on earnings after graduation. This was complex, difficult to model and meant that higher earners paid more in real-terms interest throughout their repayment period.

Plan 5 is simpler: interest is charged at RPI (Retail Price Index) only, both while you are studying and after you graduate. There is no income-linked premium. This means your loan balance grows in line with inflation rather than above it, which in theory preserves the real value of what you borrowed without adding a profit margin for the lender.

In practice, RPI can still be significant. During periods of high inflation such as 2022 and 2023, RPI exceeded 10%. A £50,000 balance growing at 10% RPI adds £5,000 to your outstanding debt in a single year, which for many borrowers will far exceed the repayments they are making. For lower earners, this means their balance can continue to grow even while they are actively repaying · a situation sometimes called negative amortisation.

However, because any unpaid balance is written off at the end of 40 years regardless, the growing balance only matters if you were likely to repay in full anyway. For most graduates, the interest rate is somewhat irrelevant in practice.

6 · Will You Actually Pay It Back?

This is the question that most guides shy away from answering honestly. The Institute for Fiscal Studies (IFS) has modelled Plan 5 extensively and estimates that around 60 to 70% of Plan 5 graduates will not repay their loan in full within the 40-year window. Their remaining balance will be written off at that point, meaning they effectively paid a graduate tax equal to 9% of earnings above £25,000 for 40 years rather than repaying a loan.

Who is likely to repay in full? Roughly speaking, graduates who go on to earn well above average salaries for most of their careers. This typically means those entering high-earning professions such as medicine, law, finance, engineering and technology · particularly if they progress quickly into senior roles. For these individuals, the loan functions more like a genuine debt and paying it off efficiently matters.

For the majority of graduates who earn average or slightly above-average salaries, the loan will not be fully repaid. They will make 40 years of income-linked repayments and the balance will be written off. This is not a failure of the system · it is how it is designed to work.

Understanding which category you are likely to fall into is important when making decisions about overpayments, career choices and financial planning.

7 · Should You Overpay Your Student Loan?

You can make voluntary overpayments on your student loan at any time by contacting the Student Loans Company. There is no early repayment penalty. But the key question is: should you?

The answer depends almost entirely on whether you are on track to repay in full within 40 years. If you are not going to repay in full · which applies to roughly 60-70% of Plan 5 graduates · then overpaying is financially irrational. Any extra money you put in reduces your balance, but the remaining balance will be written off anyway. You are voluntarily paying more than the system requires you to pay, and you will not get that money back.

If you are on track to repay in full (typically those on very high graduate salaries), then overpaying can make sense if the student loan interest rate (RPI) is higher than the after-tax return you could get by investing that money elsewhere. In a high-inflation environment, this calculation becomes closer, but in normal conditions a diversified investment is likely to outperform loan repayments even for high earners.

The most important rule: never overpay your student loan unless you are highly confident you will repay it in full. Given that most graduates will not, the default approach for most people should be to make only the automatic PAYE repayments and direct any surplus savings elsewhere · for example into a pension, a Lifetime ISA or a general investment account.

Use our Savings Calculator to model the return on investing surplus cash versus paying down your student loan.

8 · Maintenance Loan vs Living Costs

The National Union of Students and various independent surveys consistently find that typical student living costs range from £12,000 to £18,000 per year, depending heavily on location. London students at the higher end of that range can expect rent alone to consume £8,000 to £12,000 per year for a room in shared accommodation.

The maximum maintenance loan outside London is £10,227. Even if you qualify for the maximum, there is a gap. Students typically fill this gap through:

• Part-time work during term time · typically 10-15 hours per week without significantly impacting studies
• Full-time or near-full-time work during summer vacations
• Financial support from family · not always available or appropriate
• University bursaries and scholarships · worth researching thoroughly before you start
• Careful budgeting · cooking rather than eating out, cheaper accommodation, using student discounts

It is worth building a realistic monthly budget before you start university rather than waiting to see how the money lasts. Fixed costs such as rent, utilities and course materials should be accounted for first, with flexible spending adjusted around what remains. Our Budget Planner can help you model a monthly student budget in detail.

One important note: taking on additional commercial debt (credit cards, personal loans or buy-now-pay-later) to fund a living costs shortfall is significantly more expensive than a student loan and lacks the income-linked repayment protection. Exhaust all student finance and university support options before considering commercial borrowing.

9 · Worked Example · Typical Graduate on £30,000 Salary

Let us walk through what Plan 5 repayments look like in practice for a graduate starting on £30,000 per year and receiving moderate salary growth over time.

Starting on £30,000, the monthly repayment is just £37.50 · equivalent to a modest streaming subscription. This rises to £75 at £35,000 and £112.50 at £40,000. These are not large sums relative to take-home pay, which is precisely why so many graduates do not repay in full over 40 years: the repayments are manageable, but they rarely dent a large loan balance quickly enough to clear it before the write-off date.

To understand how salary growth over a career affects your total repayment, try the Salary Calculator to model take-home pay at different income levels including the student loan deduction.

10 · The Graduate Premium · Is University Worth It Financially?

The Office for National Statistics and the IFS consistently find that, on average, graduates earn significantly more over their working lives than non-graduates. The IFS puts the median graduate earnings premium at roughly £100,000 to £150,000 in lifetime earnings after accounting for the cost of tuition and three years of foregone earnings. For certain high-earning degree subjects · medicine, law, economics, computer science · the premium is much larger.

However, averages obscure a wide distribution. A significant minority of graduates, particularly those from lower-ranked universities or in certain subject areas, earn no more than equivalent non-graduates and in some cases earn less after accounting for the years spent studying rather than working. The graduate premium is real, but it is not universal.

From a purely financial standpoint, the best approach is to consider both the likely earnings in your chosen field and the cost of the specific course. A three-year course at a research-intensive university in a high-demand subject area has a very different financial profile from a four-year course at a lower- ranked institution in a saturated job market. Neither is inherently right or wrong, but being clear-eyed about the financial trade-off helps you make a more informed decision.

It is also worth remembering that university provides benefits beyond earnings: professional networks, personal development, access to certain career paths and, for many people, a life experience they value highly. The financial analysis is one input, not the only input.

Use our University Cost Calculator to model the full financial picture for your specific course, including projected total debt, estimated monthly repayments and a rough payback scenario based on expected salary.

Frequently Asked Questions

What happens to my student loan if I move abroad?

Your obligation to repay does not disappear if you move overseas. The Student Loans Company (SLC) requires you to notify them when you move abroad and to complete an Overseas Income Assessment each year. Your repayments are calculated based on your overseas income converted to pounds sterling, using the same 9% of earnings above a threshold approach · though the threshold is adjusted for the cost of living in your country of residence. Failing to notify the SLC or to submit income assessments can result in a fixed repayment amount being assigned to you regardless of your actual earnings. The SLC has improved its overseas enforcement significantly in recent years and can pursue outstanding debts through the courts in many countries.

Does student loan affect my credit score?

No. UK student loans do not appear on your credit file and are not assessed by lenders as part of a standard credit check. They will not directly affect your ability to get a mortgage, credit card or personal loan. However, your student loan repayment does reduce your monthly take-home pay, and mortgage lenders will take your net income into account when assessing affordability. If your student loan repayment significantly reduces your disposable income, this can affect how much a lender is willing to offer you · not because of the loan itself, but because of the impact on your monthly cash flow. Always be transparent with mortgage advisers about your student loan repayment obligations.

Can I pay off my student loan early in a lump sum?

Yes, you can make a lump sum voluntary repayment at any time by contacting the Student Loans Company directly. There is no early repayment penalty. However, as discussed in Section 7 of this guide, you should think carefully before doing so. If you are unlikely to repay the full balance within 40 years · which applies to the majority of Plan 5 graduates · then any voluntary overpayment is money you would not have had to pay anyway, because the remaining balance would have been written off. Before making a lump sum payment, model your expected career earnings honestly and consider whether that money would be better directed into a pension, ISA or other investment. Only those who are highly confident of full repayment within the 40-year window are likely to benefit financially from lump sum repayments.

Disclaimer: This guide is for general informational purposes only and does not constitute financial advice. Student loan terms, thresholds and interest rates are set by the government and may change. Always check the latest figures on the official gov.uk student finance pages and consider speaking to a qualified financial adviser before making decisions about overpayments or significant financial commitments. UK Finance Calculator is not regulated by the FCA.