UK Student Loan Calculator · Methodology

How the calculation works

Project an income-contingent UK student-loan balance to repayment or write-off, show monthly and annual repayments and dated milestones, then compare voluntary overpayments with keeping or investing the cash.

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Included

Student Loan Plans 1, 2, 4 and 5
English and Welsh Postgraduate Loans (Plan 3)
Concurrent undergraduate and Postgraduate Loan deductions and balance projections
2026/27 repayment thresholds and statutory repayment percentages
Monthly and annual repayment estimates
A current balance and years remaining until write-off
One-, five- and ten-year balance milestones
An approximate payoff or write-off month and year
Salary and repayment-threshold growth
A user-entered constant interest assumption with dated official reference rates
Slower, central and faster salary-growth sensitivities
One-off and monthly voluntary overpayments applied to one selected balance
A discounted overpayment-versus-alternative-return comparison
A solved starting-salary crossover for full repayment

Outside this method

Multiple undergraduate plans in one projection
Exact weekly or monthly payroll rounding
Bonuses, multiple jobs and irregular earnings
Self Assessment and unearned income
Overseas repayment schedules and arrears
Refunds and end-of-loan Direct Debit arrangements
Investment volatility, fees and tax
A probability of repayment or personalised recommendation

Calculation

Core formulas

Compulsory repayment

Repaymentₘ = max(0, annual salary − annual threshold) × plan rate ÷ 12

Plans 1, 2, 4 and 5 use 9%; the Postgraduate Loan uses 6%. The model annualises salary instead of reproducing payroll rounding.

Combined payroll deduction

Combined repaymentₘ = undergraduate repaymentₘ + postgraduate repaymentₘ

When both balances are selected, the model calculates the 9% and 6% deductions independently against their own thresholds before adding them.

Monthly balance

Bₘ = Bₘ₋₁ + Bₘ₋₁ × interest ÷ 12 − compulsory repaymentₘ − voluntary paymentₘ

Payments are capped at the amount outstanding, so the balance cannot fall below zero.

Salary path

Salaryᵧ = starting salary × (1 + salary growth)ʸ

Salary changes once at the start of each modelled year. The sensitivity paths vary only this growth assumption.

Threshold path

Thresholdᵧ = starting threshold × (1 + threshold growth)^max(0, y − freeze years)

The threshold remains unchanged for the entered additional freeze period and then changes annually.

Lifetime cash effect

Overpayment-path total paid − compulsory-only total paid

A positive result means voluntary payments increase total cash surrendered; a negative result means they reduce it under the selected assumptions.

Present value of payments

PV = Σ paymentₘ ÷ (1 + alternative return)^(m ÷ 12)

Both compulsory and voluntary payments are discounted at the entered alternative-return assumption. A lower present value is the cheaper path in today’s-money terms; the rate is not an investment forecast.

Alternative-return crossover

Solve the discount rate where PV(overpayment path) = PV(compulsory-only path)

A bounded search from 0% to 30% reports the crossover where one exists. No crossover means one path remains cheaper throughout that range.

Full-repayment crossover

Solve starting salary where balance reaches £0 at or before write-off

A bounded binary search uses the central salary-growth path without voluntary overpayments. It is a mathematical threshold, not an earnings forecast.

Timing convention

When cash flows occur

Each selected current balance is an opening amount with its own interest rate, threshold and write-off period. In combined mode, undergraduate and postgraduate deductions run independently against the same salary. A one-off overpayment is applied immediately to the chosen balance only. Interest is then added monthly before compulsory and voluntary payments. Salary and, after any freeze, each repayment threshold change annually. One-, five- and ten-year balances are sampled from the selected compulsory-only path. The displayed calendar outcome adds the modelled month count to the current month. Any balance left at the end of its entered period is reported as reaching write-off.

Limitations

What the result cannot establish

The entered interest rate is held constant even though real rates and Plan 2 income-linked rates can change. The page separately identifies rates applying through 31 August 2026 and those announced for 1 September 2026 to 31 August 2027.
Annual salary smoothing can differ from deductions on an actual payslip, which uses pay-period thresholds and whole-pound rounding.
Future repayment thresholds, interest policy and write-off rules may change.
The calculator does not infer the correct plan or remaining write-off period from course dates.
Salary sensitivities are deterministic illustrations and do not assign probabilities.
The alternative-return comparison does not model investment volatility, fees, tax or liquidity and is not a recommendation.
Voluntary payments cannot generally be refunded.
Displayed whole-pound values can differ slightly from the underlying unrounded calculation.

Reference tests

Numerical checks

Case	Inputs	Expected result
Plan 2 annual deduction	£45,000 salary; £29,385 threshold; 9% repayment rate	£1,405.35 annually, or £117.1125 a month before payroll rounding
Combined Plan 2 and Postgraduate deduction	£45,000 salary; £29,385 undergraduate threshold at 9%; £21,000 postgraduate threshold at 6%	£2,845.35 annually, or £237.1125 a month before payroll rounding
Zero-interest payoff	£12,000 balance; £30,000 salary; £20,000 threshold; 9% rate; 0% interest and growth	£75 a month and repayment after 160 months
No earnings	Positive balance; £0 salary; positive interest; no voluntary payments	£0 repaid and the remaining balance reaches write-off
Immediate repayment	£0 opening balance	Repaid immediately with £0 total paid
Zero-rate present value	0% alternative return	Present value of each path equals its nominal total payments

Evidence

Sources

GOV.UK — Student-loan repayment amounts and 2026/27 thresholds GOV.UK — When student loans are written off GOV.UK — Which repayment plan you are on HMRC — 2026/27 Student and Postgraduate Loan deduction tables Student Loans Company — Interest rates from September 2026 GOV.UK — Making extra repayments Department for Education — Student-loan forecast methodology