Will You Ever Repay Your Student Loan? Here's How to Find Out
Most Plan 2 borrowers will never repay in full. Learn how UK student loan repayment works, see worked examples at different salaries, and find out whether overpaying makes sense.
About three quarters of Plan 2 borrowers will never repay their student loan in full. The remaining balance just gets written off after 30 years. If you graduated after 2012, you are probably in this group, and that is not a bad thing. Once you understand how the system actually works, the whole picture changes.
You can run your own numbers with the Student Loan Calculator to see where you land.
This Is Not a Normal Loan
Forget everything you know about how loans work. There is no monthly bill. Repayments come straight out of your salary through PAYE, but only on earnings above a threshold. Earn below it and you pay nothing. Lose your job and you pay nothing. Your repayments shrink automatically if your income drops.
After a set number of years (depending on your plan), whatever is left gets wiped. No penalty, no tax charge, nothing.
You cannot default on it. It does not appear on credit checks or affect your ability to get a mortgage. In practice, it works more like a 9% graduate tax on earnings above a threshold than anything resembling actual debt.
Which Plan Are You On?
Your plan depends on when and where you studied. Here are the 2025/26 thresholds:
| Plan | Who It Applies To | Threshold | Rate | Written Off |
|---|---|---|---|---|
| Plan 1 | England/Wales pre-2012, NI | £24,990 | 9% above | 25 years |
| Plan 2 | England/Wales post-2012 | £27,295 | 9% above | 30 years |
| Plan 4 | Scotland (post-1998) | £31,395 | 9% above | 30 years |
| Plan 5 | England post-2023 | £25,000 | 9% above | 40 years |
| Postgrad | Postgraduate loan | £21,000 | 6% above | 30 years |
Notice that Plan 5 (for the newest borrowers) has a lower threshold and a much longer repayment window of 40 years. This means newer graduates will repay for longer, though the interest rate is capped at RPI only, which is more favourable than Plan 2.
Interest Rates (And Why They Probably Don't Matter)
Student loan interest is linked to the Retail Price Index (RPI). The exact rate depends on your plan.
Plan 1 and Plan 4: The lower of RPI or Bank of England base rate plus 1%. Usually quite low.
Plan 2: While studying, you pay RPI + 3%. After graduation, the rate slides between RPI and RPI + 3% based on your income. Earn below the threshold and it is RPI only. Earn above £49,130 and it is the full RPI + 3%.
Plan 5: Capped at RPI regardless of income, which is a much better deal than Plan 2.
Here is the thing that trips people up: if you are never going to repay in full (and most people won't), the interest rate is irrelevant. A higher rate just inflates the balance that gets written off. Your monthly repayments do not change at all, because they are based purely on your income, not your balance.
Three Graduates, Three Outcomes
Take a typical Plan 2 borrower with £45,000 of debt (tuition plus maintenance). Assume 2% annual salary growth and interest at RPI + 3% (about 6.3% right now). What happens?
Scenario 1: Starting salary £30,000 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Annual repayment in year 1: (£30,000 - £27,295) × 9% = £243 Annual interest in year 1: £45,000 × 6.3% = £2,835 Your balance grows every year. You will never come close to repaying. After 30 years, the remaining balance is written off. Total repaid over 30 years: ~£28,000 Amount written off: ~£65,000+ Scenario 2: Starting salary £50,000 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Annual repayment in year 1: (£50,000 - £27,295) × 9% = £2,043 Annual interest in year 1: £45,000 × 6.3% = £2,835 You are almost keeping pace with interest, but not quite. With salary growth, you start outpacing interest after a few years, but likely will not fully repay within 30 years. Total repaid over 30 years: ~£85,000 Amount written off: ~£5,000 to £15,000 Scenario 3: Starting salary £70,000 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Annual repayment in year 1: (£70,000 - £27,295) × 9% = £3,843 Annual interest in year 1: £45,000 × 6.3% = £2,835 You are outpacing interest from day one. With salary growth, you will likely repay in full within 15 to 20 years. Total repaid over ~17 years: ~£50,000 to £55,000 Amount written off: £0
Your numbers will be different. Use the Student Loan Calculator to model your exact situation.
Your Starting Salary Matters Less Than You Think
What actually determines whether you repay is not where you start, but where you end up. Someone starting on £28,000 who reaches £60,000 within a decade will repay far more than someone who starts on £35,000 and stays there.
Remember, you only repay 9% of earnings above the threshold. Here is what that looks like at different salaries:
Monthly repayment at different salaries (Plan 2): £25,000 salary: £0/month (below threshold) £30,000 salary: £20/month (9% of £2,705) £35,000 salary: £58/month (9% of £7,705) £40,000 salary: £95/month (9% of £12,705) £50,000 salary: £170/month (9% of £22,705) £60,000 salary: £245/month (9% of £32,705) £80,000 salary: £395/month (9% of £52,705) £100,000 salary: £545/month (9% of £72,705)
Even at £100,000, you are only paying £545 per month. For many high earners, the question is not whether they can afford repayments, but whether they will repay enough over 30 years to clear the balance before it gets written off.
Should You Overpay? (Probably Not)
This comes up constantly, and the answer for most people is a clear no.
If you are never going to repay in full, every pound you voluntarily overpay is a pound that would have been written off for free. You are literally giving away money for no benefit. The write-off is not a penalty. It is a feature of the system.
If you are on track to repay in full, overpaying can save you interest, but weigh it against the alternatives. An emergency fund, pension contributions (which also reduce your taxable income and therefore your student loan repayments), or ISA investments may all be better uses of that money.
The only clear case for overpaying: you are a high earner who will definitely repay, you have a big balance at RPI + 3%, and you have already maxed out your ISA and pension. That is a pretty small group.
Quick test: add up your projected repayments over the remaining term. If that total exceeds your current balance plus interest, you will repay in full, and overpaying saves money. If not, keep your cash.
Stop Calling It Debt
The most practical way to think about your student loan: it is a 9% tax on earnings above £27,295, and it expires after 30 years. That is it.
The balance on your Student Loans Company account? For most graduates, it is a meaningless number. Whether you borrowed £30,000 or £60,000, your monthly repayments are identical, because they are based on your income, not your balance. The only difference is the size of the write-off at the end.
Worrying about the interest rate growing your balance is equally pointless if you will never repay. The balance might hit six figures on paper. If it all gets written off, who cares?
Check Your Numbers
The only question that actually matters: will you repay before the write-off kicks in? That determines everything, from whether overpaying makes sense to whether you should lose any sleep over it at all.
Plug your salary, balance, and plan into the Student Loan Calculator and it will show you the full picture: projected repayments year by year, total amount repaid, and how much (if anything) gets written off.
For the majority of graduates reading this, the answer will be reassuring. You are not drowning in debt. You are paying a manageable, income-linked contribution that disappears after a set number of years, and overpaying it would be like voluntarily paying more tax.