Should I overpay my student loan or invest the money?

It depends on your salary trajectory and how much of the loan you are projected to repay before the write-off date. Higher earners projected to repay in full may save on interest by overpaying. Lower and mid earners projected to reach the write-off may see a higher projected outcome from investing, since any remaining balance is cancelled. Use the calculator to compare projected outcomes for your situation.

What assumptions does the student loan calculator use?

The calculator supports Plan 1, Plan 2, Plan 3 (Postgraduate), Plan 4 (Scottish) and Plan 5 rules. It uses each plan's specific repayment rate (9% for undergrad plans, 6% for Plan 3), write-off period (25, 30 or 40 years), threshold schedule, and interest formula. From September 2026, Plans 2 and 3 have a 6% interest rate cap. The current version models one plan at a time. Investment returns default to 5% real. It models four investment vehicles: ISA, Pension/SIPP, Salary Sacrifice, and GIA, each with their correct tax treatment.

What does the calculator not account for?

The calculator assumes steady salary growth rather than modelling promotions or career changes. Investment returns are applied as a constant annual rate without modelling market volatility. It does not account for ISA annual allowances, pension lifetime allowances, or future changes to tax rules beyond the configurable tax band growth rate. All projections are estimates, not predictions.

UK Student Loan Guide (Plan 1, 2, 3, 4 & 5): Overpay or Invest?

Q: When does my student loan get written off?

Plan 1 loans (post-2006) are written off 25 years after the April you were first due to repay. Plan 2, Plan 3, and Plan 4 loans are written off after 30 years. Plan 5 loans are written off after 40 years. For most graduates, this means the loan is cancelled regardless of how much is left. The write-off date is based on when you became eligible to repay, not when you graduated.

Q: How much do I repay on my student loan each month?

For Plans 1, 2, 4 and 5, you repay 9% of your income above the repayment threshold. The 2026/27 thresholds (in effect from April 2026) are: Plan 1 £26,900, Plan 2 £29,385, Plan 4 (Scottish) £33,795, and Plan 5 £25,000. Plan 3 (Postgraduate) uses a 6% rate above a £21,000 threshold. If you earn below your threshold, you pay nothing.

Q: What is the difference between Plan 1, Plan 2, Plan 3, Plan 4 and Plan 5?

Plan 1 applies to UK undergraduates who started before 2012. Plan 2 applies to English undergraduates starting between 2012 and 2023. Plan 3 is for postgraduate loans (Master's or Doctoral). Plan 4 applies to Scottish undergraduates. Plan 5 applies from 2023 onwards for English/Welsh students. They differ in repayment rates (9% for Plans 1/2/4/5, 6% for Plan 3), thresholds (Plan 1: £26,900 / Plan 2: £29,385 / Plan 3: £21,000 / Plan 4: £33,795 / Plan 5: £25,000 for 2026/27), write-off periods (25 / 30 / 30 / 30 / 40 years), and interest formulas.

Q: What interest rate is charged on student loans?

Plan 1 interest is the lower of RPI or Bank of England base rate + 1%. Plan 2 interest ranges from RPI to RPI + 3%, depending on your income, and is capped at 6% from September 2026. Plan 3 interest is fixed at RPI + 3% regardless of income, also capped at 6% from September 2026. Plan 4 (Scottish) interest is RPI only, regardless of income. Plan 5 interest is simply RPI regardless of income (approx. 3.2% for 2026/27).

About This Project

I built this after trying to make sense of my own Plan 2 loan. I'm on track to repay it in full, which means the usual "it's just a graduate tax" line didn't quite answer the question for me. What I really wanted to know was whether I'd be better off overpaying the loan, or investing that money instead.

Most calculators focus on whether you'll repay before the write-off date. Very few actually compare overpaying versus investing in a clear way, especially for people whose outcome is marginal. So I built something that models both sides and lets you adjust the assumptions.

There are no accounts, no tracking, and no data stored. It is just a tool to help you think through the trade-offs using your own numbers.

If you've found it helpful and would like to support the project, you can buy me a coffee. These contributions help with the hosting and domain costs.

Which Plan Am I On?

If you started an undergraduate course in the UK before September 2012, you are on Plan 1. If you started in England between September 2012 and July 2023, you are on Plan 2. If you started from September 2023 onwards (in England or Wales), you are on the newer Plan 5.

If you are a Scottish undergraduate, you are on Plan 4, regardless of when you started. Plan 4 has a higher threshold and RPI-only interest.

If you took out a Postgraduate Loan for a Master's or Doctoral course, that loan is on Plan 3.

Plans 1, 2, 4 and 5 share the same basic mechanic: repayments are collected automatically through payroll at 9% of income above a threshold. Plan 3 uses a lower 6% rate above a lower threshold. The key differences are in the threshold amount, the interest rate formula, and the write-off period.

Plan 1, 2, 3, 4 & 5 at a Glance

	Plan 1	Plan 2	Plan 3 (PG)	Plan 4 (Scottish)	Plan 5
Who	Started uni pre-2012	Started uni 2012–2023 (England)	Postgraduate loan	Scottish undergraduate	Started uni 2023+ (England/Wales)
Repayment rate	9%	9%	6%	9%	9%
Threshold	£26,900	£29,385	£21,000	£33,795	£25,000
Interest rate	Lower of RPI or base rate + 1%	RPI to RPI + 3% (income-scaled, capped at 6% from Sep 2026)	RPI + 3% (fixed, capped at 6% from Sep 2026)	RPI only	RPI only
Write-off	25 years	30 years	30 years	30 years	40 years
Threshold frozen until	Not frozen (grows with RPI)	2030	Frozen indefinitely	Not frozen (grows with RPI)	2027

How Repayments Work

On Plans 1, 2, 4 and 5, you repay 9% of your income above the repayment threshold. Plan 3 (Postgraduate) uses a lower rate of 6% above £21,000. If you earn less than the threshold, you pay nothing. Repayments are collected automatically through payroll, just like tax and National Insurance.

The key difference is the threshold level. Plan 1's threshold is £26,900, Plan 2's is £29,385, Plan 4's is the highest at £33,795, Plan 5's is £25,000, and Plan 3's is the lowest at £21,000 (frozen indefinitely).

Repayments scale with your income. If your salary drops, so do your repayments. If you lose your job, they stop entirely. This makes student loans very different from conventional debt.

The Write-Off

Loans are written off after a set number of years from the April you were first due to repay: 25 years for Plan 1 (post-2006 loans), 30 years for Plan 2, Plan 3 and Plan 4, and 40 years for Plan 5. Any remaining balance is cancelled regardless of how much is outstanding.

This is important context because if you are not projected to repay in full before the write-off date, any voluntary overpayment would reduce a balance that would otherwise have been cancelled. It does not change the amount collected through payroll.

Plan 1's shorter 25-year write-off means many borrowers will have their loans cancelled sooner. Plan 5's longer 40-year window means borrowers have more time to repay in full, but it also means repayments continue for longer if the loan would have been written off anyway.

Interest Rates

Interest on all plans is linked to the Retail Prices Index (RPI), but the formula differs:

Plan 1

Lower of RPI or base rate + 1%
Independent of income
Typically the lowest rate of all plans

Plan 2

Below threshold: RPI only (approx. 3.2% for 2026/27)
Above upper threshold: RPI + 3%
In between: sliding scale
Capped at 6% from September 2026

Plan 3 (Postgraduate)

Fixed RPI + 3% regardless of income
Capped at 6% from September 2026

Plan 4 (Scottish)

RPI only (approx. 3.2% for 2026/27), regardless of income
No income-based scaling

Plan 5

RPI only (approx. 3.2% for 2026/27), regardless of income
No income-based scaling

These rates may sound high, but remember: interest only matters if you are going to repay the full balance. If your loan is destined to be written off, the interest is simply increasing a number that gets cancelled regardless.

Frequently Asked Questions

When does my student loan get written off? ▼

Write-off timing depends on your student loan plan:

Plan 1 (post-2006): 25 years after the April you were first due to repay.
Plan 2, Plan 3 and Plan 4: 30 years after the April you were first due to repay.
Plan 5: 40 years after the April you were first due to repay.

For most full-time graduates, the remaining balance is cancelled at write-off, regardless of how much is left.

How much do I repay on my student loan each month? ▼

Monthly repayments are based on your income above the plan threshold:

Plans 1, 2, 4 and 5: 9% of income above your threshold.
Plan 3 (Postgraduate): 6% of income above £21,000.

2026/27 thresholds (from April 2026):

Plan 1: £26,900
Plan 2: £29,385
Plan 4 (Scottish): £33,795
Plan 5: £25,000

If you earn below your threshold, you repay nothing.

What is the difference between Plan 1, Plan 2, Plan 3, Plan 4 and Plan 5? ▼

Each plan has different repayment rules:

Plan 1: UK undergraduates who started before 2012; 9% repayment rate; write-off after 25 years.
Plan 2: English undergraduates who started between 2012 and 2023; 9% repayment rate; write-off after 30 years.
Plan 3: Postgraduate loans (Master's or Doctoral); 6% repayment rate; write-off after 30 years.
Plan 4: Scottish undergraduates; 9% repayment rate; write-off after 30 years.
Plan 5: English/Welsh undergraduates from 2023 onwards; 9% repayment rate; write-off after 40 years.

Interest formulas also differ by plan (see the next FAQ).

What interest rate is charged on student loans? ▼

Interest rates vary by plan:

Plan 1: lower of RPI or Bank of England base rate + 1%.
Plan 2: income-linked from RPI to RPI + 3%, capped at 6% from September 2026.
Plan 3: fixed at RPI + 3%, capped at 6% from September 2026.
Plan 4: RPI only, regardless of income.
Plan 5: RPI only, regardless of income (approx. 3.2% for 2026/27).

What Assumptions Does the Calculator Use?

All calculator inputs are adjustable, but the following assumptions and rules are built into the simulation. Understanding these helps you interpret the results.

Loan repayment rules ▼

The calculator supports Plan 1, Plan 2, Plan 3 (Postgraduate), Plan 4 (Scottish) and Plan 5. Plans 1, 2, 4 and 5 use a 9% repayment rate; Plan 3 uses 6%. Plan 1 loans are written off after 25 years; Plan 2, Plan 3 and Plan 4 after 30 years; Plan 5 after 40 years.

Plan 1: The threshold is £26,900, growing with RPI each April. Interest is the lower of RPI or BoE base rate + 1%. Near-term base rates use published forecasts (4.0% for 2026), then fall to a configurable long-run rate.

Plan 2: The threshold is £29,385 from April 2026, frozen until 2030. Interest is income-scaled from RPI to RPI + 3%, capped at 6% from September 2026. Near-term RPI uses published forecasts (3.2% for 2026), then falls to a configurable long-run rate.

Plan 3 (Postgraduate): The threshold is £21,000, frozen indefinitely. Interest is fixed at RPI + 3%, capped at 6% from September 2026, regardless of income.

Plan 4 (Scottish): The threshold is £33,795, growing with RPI each April. Interest is RPI only, regardless of income.

Plan 5: The threshold is £25,000, frozen until 2027. Interest is RPI only, regardless of income. After the freeze, thresholds grow at a configurable rate.

Tax and investment treatment ▼

The calculator models four investment vehicles: ISA (tax-free growth, no relief on contribution), Pension/SIPP (income tax relief on the way in, 25% tax-free lump sum on withdrawal, remainder taxed at your retirement tax rate), Salary Sacrifice pension (same as SIPP but also saves National Insurance), and GIA (no tax benefits, with an annual tax drag you can set).

Tax bands use 2024/25 rates: 20% basic, 40% higher, 45% additional, with 12% and 2% National Insurance respectively. Income tax thresholds are frozen until 2031 in the model, after which they grow at a rate you can set under Advanced Assumptions (defaults to 2%).

Threshold growth (for loan repayments) and tax band growth (for income tax) are two separate settings, both configurable under Advanced Assumptions.

Freed cashflow after loan payoff or write-off ▼

When your loan is either paid off early (through overpayments) or written off, you stop making repayments. The calculator assumes these freed repayments are then invested until retirement, giving a fair like-for-like comparison between strategies.

You can adjust what percentage of freed cashflow gets invested (the rest is treated as extra spending). This is one of the most important factors in the comparison.

What the calculator does not model ▼

The calculator assumes your salary grows at a steady annual rate. It does not model promotions, redundancies, or career changes. Investment returns are applied as a constant annual rate with monthly compounding, without modelling market volatility or sequence-of-returns risk.

It also does not account for ISA annual allowances, pension lifetime allowances, or future changes to tax rules beyond the configurable tax band growth rate. All projections are estimates, not predictions.

UK Student Loan Guide (Plan 1, 2, 3, 4 & 5)