Many teachers in England and Wales entered the profession carrying student loan debt from their undergraduate or postgraduate studies. Understanding how student loan repayments work is essential for accurate financial planning, because the deductions appear automatically on your payslip once you earn above the relevant threshold. This guide covers every active repayment plan, the thresholds and rates that apply from April 2025, write-off rules, and teacher-specific strategies for managing your balance efficiently.
Overview of Student Loan Repayment Plans
HM Revenue and Customs (HMRC) and the Student Loans Company (SLC) administer repayments through the PAYE system. Your employer deducts the correct amount each pay period based on the plan type encoded in your tax code or notified separately by the SLC. There are currently five active plan types, and it is possible to be repaying more than one simultaneously if you hold both an undergraduate and a postgraduate loan.
Which Plan Are You On?
Plan 1 — Pre-2012 Undergraduate Loans
Plan 1 covers students who took out loans for courses starting before 1 September 2012 in England and Wales, or any undergraduate course in Northern Ireland. The annual repayment threshold is £26,900. You repay 9% of everything you earn above that threshold. For a teacher on M3 earning £38,400 outside London, the annual repayment would be 9% of £11,500 = roughly £1,035.
Plan 1 loans taken out from September 2006 onwards are written off 25 years after the April following your graduation. Older Plan 1 loans (taken out before September 2006) are written off when you reach age 65. Interest on Plan 1 loans is set at the lower of the Bank of England base rate plus 1%, or the RPI rate of inflation, meaning the balance grows relatively slowly compared with Plan 2.
Plan 2 — Post-2012 Undergraduate Loans (England and Wales)
Plan 2 is the most common plan among newer teachers. The annual repayment threshold is £29,385, and the repayment rate is 9% of income above that threshold. Interest is variable: while you are earning below £29,385, the rate is set at RPI only. Between the threshold and £49,130, interest tapers from RPI up to RPI plus 3%. Above £49,130, you pay the maximum rate of RPI plus 3%.
Plan 2 loans are written off 30 years after the April following your graduation or the April after you left your course, whichever is later. For many teachers, especially those who never move into very high-paying roles, the full balance will be written off before they finish repaying. It is therefore important to consider whether making voluntary overpayments actually benefits you — in many cases, it does not.
Plan 4 — Scottish Undergraduate Loans
Teachers who studied in Scotland and subsequently moved to teach in England or Wales will be on Plan 4. The annual repayment threshold is £33,795, which is the highest undergraduate threshold. The repayment rate remains 9%. This means Scottish-educated teachers keep more of their salary before repayments begin, an important factor when comparing take-home pay across the UK. Plan 4 loans are written off 30 years after the April following your graduation.
Plan 5 — New Plan from August 2023
Plan 5 was introduced for students starting courses from 1 August 2023. The annual repayment threshold is £25,000, lower than Plans 2 and 4, meaning repayments begin sooner. The rate is 9%. However, Plan 5 loans have a longer write-off period of 40 years after the April following graduation. Interest is capped at RPI only (no RPI plus 3% element), so the balance grows more slowly than under Plan 2 but persists for a decade longer.
Postgraduate Loan Plan
If you took out a Postgraduate Master's Loan or Postgraduate Doctoral Loan, you repay under the Postgraduate Loan plan at 6% of income above the £21,000 threshold. This is deducted in addition to any undergraduate plan repayment. A teacher on Plan 2 and the Postgraduate plan earning £40,000 would repay 9% of £10,615 plus 6% of £19,000 each year — a combined deduction of roughly £2,095 annually.
Simultaneous Repayments
Repayment Threshold and Rate Summary
| Plan | Annual Threshold | Rate | Write-Off |
|---|---|---|---|
| Plan 1 | £26,900 | 9% | 25 years (or age 65 for pre-2006) |
| Plan 2 | £29,385 | 9% | 30 years |
| Plan 4 (Scotland) | £33,795 | 9% | 30 years |
| Plan 5 | £25,000 | 9% | 40 years |
| Postgraduate | £21,000 | 6% | 30 years |
Teacher-Specific Considerations
Training Bursaries and Scholarships
If you received a tax-free training bursary or scholarship during your PGCE or teacher training year, this does not count as taxable income and therefore does not trigger student loan repayments. Only income that appears on your payslip and is subject to PAYE counts towards the threshold. This is a significant benefit for trainee teachers, as bursaries in shortage subjects such as physics, mathematics, and chemistry can be worth up to £28,000.
Salary Sacrifice and Repayment Reduction
Salary sacrifice arrangements — where your employer deducts an amount from your gross salary before tax and National Insurance — can reduce your student loan repayments. The most common salary sacrifice scheme available to teachers is the cycle-to-work scheme. Additional voluntary contributions to the Teachers' Pension Scheme via salary sacrifice also reduce your assessable income. If your gross salary is £35,000 and you sacrifice £1,200 per year through a cycle-to-work scheme, your student loan is calculated on £33,800 instead, saving roughly £108 per year in repayments on Plan 2.
Checking Your Balance and Repayment Status
You can check your current student loan balance, repayment history, and plan type through your online Student Loans Company account at repayment.slc.co.uk. It is worth checking this at least once a year to ensure you are on the correct plan and that your repayments are being recorded accurately. Teachers who have overpaid — for example, because their employer continued deductions after the loan was cleared — can claim a refund from the SLC.
Avoid Overpaying When Close to Write-Off
How Repayments Appear on Your Payslip
Student loan repayments are shown as a separate line on your payslip, usually labelled "Student Loan" or abbreviated as "SL" or "SLC". They are deducted after tax and National Insurance but before your net pay is calculated. If you are on multiple plans, you may see two separate deduction lines. Your P60 at the end of the tax year will show the total student loan deductions made during the year.
What Happens When You Change Schools
When you move to a new school or academy trust, your new employer will receive your student loan plan details from HMRC via your starter checklist (formerly the P46). Ensure you complete the starter checklist accurately, including your student loan plan type, to avoid being placed on the wrong plan. If you notice incorrect deductions on your first payslip with a new employer, contact your payroll department immediately and also notify the SLC.
Understanding your student loan plan and how repayments interact with your teacher salary is an important part of financial planning. Use our take-home pay calculator to see exactly how student loan deductions affect your monthly income alongside tax, National Insurance, and pension contributions.