All Plans Compared
| Plan | Threshold | Annual Repayment | Take Home/Month |
|---|---|---|---|
| No student loan | — | £0 | £2,813 |
| Plan 1 | £24,990 | -£1,531 | £2,686 |
| Plan 2 | £27,295 | -£1,323 | £2,703 |
| Plan 5 | £25,000 | -£1,530 | £2,686 |
Student loan repayments are 9% of income above the threshold. They're deducted automatically through PAYE. Plan 2 loans are written off after 30 years.
Understanding Student Loan Repayments on £42,000
Student loan repayments are calculated as 9% of income above the relevant threshold. On a salary of £42,000:
Plan 2 (started university 2012-2023): The repayment threshold is £27,295/year. You repay approximately £110/month (£1,323/year). Plan 2 loans are written off after 30 years.
Plan 5 (started university 2023 onwards): The repayment threshold is £25,000/year. You repay approximately £128/month (£1,530/year). Plan 5 loans are written off after 40 years, and the interest rate is capped at RPI only (no additional margin above inflation).
Should You Overpay Your Student Loan?
At £42,000, your repayments are meaningful but the loan is unlikely to be fully repaid before write-off for Plan 2 borrowers with typical debt levels (£40,000-£50,000). Voluntary overpayments are rarely beneficial — the money is almost always better spent on pension contributions, ISA savings, or mortgage overpayments. Student loans do not appear on credit checks and do not affect mortgage applications (though lenders factor in the reduced take home pay).