Take-home pay with student loan
Your student loan is a third deduction on top of income tax and National Insurance. Pick your plan to see the real monthly take-home once all three come off.
How the deduction works
The student loan is not a flat percentage of your salary. It is 9% of the part of your income that sits above your plan’s threshold, or 6% for a Postgraduate Loan. So on a salary just above the threshold the deduction is tiny, and it grows as your pay pulls further clear of that line. It is collected through PAYE alongside tax and National Insurance, but it is a separate calculation from either.
One point is often misunderstood: the loan does not lower your taxable income. You still pay income tax and National Insurance on your whole salary, then the loan comes off on top. That is why adding a student loan to the same salary noticeably reduces what actually reaches your account, even though your tax code has not changed.
Worked example
On a £35,000 salary on the Plan 2, the loan applies to income above £29,385. That leaves £5,615 exposed, and 9% of it is £505 a year. Add that to £4,486 income tax and £1,794 National Insurance, and the take-home falls to £28,215 a year, about £2,351.22 a month.
Common questions
How much is my student loan repayment?
You repay 9% of everything you earn above your plan’s threshold for undergraduate plans, or 6% for a Postgraduate Loan. It is not 9% of your whole salary, only the part over the threshold. That is why a small pay rise near the threshold changes the deduction less than people expect.
Which plan am I on?
It depends on where and when you studied. Plan 1 and Plan 2 cover most English and Welsh undergraduates by start date, Plan 4 is Scotland, Plan 5 is for courses starting from 2023 onward, and the Postgraduate Loan is separate. This tool lets you pick, with thresholds of £26,900 up to £25,000.
Is the student loan taken before or after tax?
It is worked out on your gross pay, like tax, but it does not reduce your taxable income. So you pay income tax and National Insurance on the full salary, and the loan deduction sits on top. All three come out through PAYE before the money reaches you.
Can I have two student loans at once?
Yes. If you have an undergraduate plan and a Postgraduate Loan, both are collected together, so you could pay 9% above one threshold and 6% above the other at the same time. This calculator handles one plan at a time; add the two deductions if you have both.
Should I overpay my student loan?
Often not. The loan is written off after a set period and behaves more like a graduate tax than a normal debt. Many people never repay it in full, so overpaying can waste money you would keep otherwise. It only makes sense if you are clearly going to clear the balance well before write-off.