Compulsory repayment
Repaymentₘ = max(0, annual salary − annual threshold) × plan rate ÷ 12Plans 1, 2, 4 and 5 use 9%; the Postgraduate Loan uses 6%. The model annualises salary instead of reproducing payroll rounding.
Student Loan Repayment Calculator · Methodology
How the calculation works
Project an income-contingent UK student-loan balance to repayment or write-off, then test whether voluntary overpayments reduce or increase the borrower’s modelled lifetime cash cost.
Return to calculatorIncluded
- Student Loan Plans 1, 2, 4 and 5
- English and Welsh Postgraduate Loans
- 2026/27 repayment thresholds and statutory repayment percentages
- A current balance and years remaining until write-off
- Salary and repayment-threshold growth
- A user-entered constant interest assumption
- Slower, central and faster salary-growth sensitivities
- One-off and monthly voluntary overpayments
- A solved starting-salary crossover for full repayment
Outside this method
- Multiple undergraduate plans in one projection
- Concurrent undergraduate and Postgraduate Loan deductions
- 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
- A probability of repayment or personalised recommendation
Calculation
Core formulas
Monthly balance
Bₘ = Bₘ₋₁ + Bₘ₋₁ × interest ÷ 12 − compulsory repaymentₘ − voluntary paymentₘPayments are capped at the amount outstanding, so the balance cannot fall below zero.
Salary path
Salaryᵧ = starting salary × (1 + salary growth)ʸSalary 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 paidA positive result means voluntary payments increase total cash surrendered; a negative result means they reduce it under the selected assumptions.
Full-repayment crossover
Solve starting salary where balance reaches £0 at or before write-offA 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
The selected current balance is the opening amount. A one-off overpayment is applied immediately. Interest is then added monthly before compulsory and voluntary payments. Salary and, after any freeze, the repayment threshold change annually. Any balance left at the end of the 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.
- 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.
- Voluntary payments cannot generally be refunded, while the calculator does not value liquidity or alternative uses of cash.
- Displayed whole-pound values can differ slightly from the underlying unrounded calculation.
Reference tests
Numerical checks
| Case | Inputs | Expected result |
|---|---|---|
| Plan 2 annual deduction | £40,000 salary; £29,385 threshold; 9% repayment rate | £955.35 annually, or £79.6125 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 |
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 Department for Education — Student-loan forecast methodology