Step-by-step calculation
Step 1 — Confirm PGL
PGL applies if you took out a UK Postgraduate Loan for master's or PhD study from 2016 onwards in England or Wales. Scottish postgraduate funding (via SAAS) is separate and doesn't create a UK PGL.
Step 2 — Identify threshold-relevant income
- Gross annual salary
- Subtract salary-sacrifice pension
- Subtract net-pay pension
- Don't subtract relief-at-source pension
Step 3 — Apply the formula
Annual PGL deduction = max(0, income − £21,000) × 6%
Step 4 — Per-period
- Monthly threshold: £21,000 / 12 = £1,750
- Weekly threshold: £21,000 / 52 = £403.85
- 4-weekly: £21,000 / 13 = £1,615.38
Each period: earnings above period threshold × 6%, rounded DOWN.
Worked example 1 — PGL only on £25,000
Annual: - Above £21,000: £4,000 - 6% × £4,000 = £240/year
Monthly: £20.
Annual PGL deduction is meaningful from quite low incomes — £240/year at £25,000 represents ~1% of gross.
Worked example 2 — PGL only on £40,000
Annual: - Above £21,000: £19,000 - 6% × £19,000 = £1,140/year
Monthly: £95. About 2.85% of gross.
Worked example 3 — Plan 2 + PGL on £40,000
Plan 2: - Above £29,385: £10,615 × 9% = £955
PGL: - Above £21,000: £19,000 × 6% = £1,140
Combined annual: £2,095 Combined monthly: £174.
For someone with both Plan 2 + PGL on £40,000, student loan is ~5.2% of gross — a meaningful slice.
Worked example 4 — Plan 5 + PGL on £35,000
Plan 5: - Above £25,000: £10,000 × 9% = £900
PGL: - Above £21,000: £14,000 × 6% = £840
Combined annual: £1,740 Combined monthly: £145.
For a 2023+ E&W graduate who also took PGL, this is the typical situation. Combined SL is 5% of gross at this income.
Worked example 5 — Plan 2 + PGL with pension sacrifice
£35,000 base, 6% salary sacrifice (£2,100):
Without sacrifice: - Plan 2: above £29,385 = £5,615 × 9% = £505 - PGL: above £21,000 = £14,000 × 6% = £840 - Combined: £1,345
With sacrifice: - Threshold-relevant income: £32,900 - Plan 2: above £29,385 = £3,515 × 9% = £316 - PGL: above £21,000 = £11,900 × 6% = £714 - Combined: £1,030
Saving from sacrifice: £315 SL + ~£840 Income Tax + NI = ~£1,155 Pension contribution: £2,100 Net cost to take-home: ~£945 for £2,100 pension contribution.
For Plan 2 + PGL borrowers, pension sacrifice has compounded value (reduces both deductions plus tax).
Combined-rate breakdown
| Income range | Effective marginal student loan rate |
|---|---|
| Below £21,000 | 0% (below all thresholds) |
| £21,000 to plan threshold | 6% (PGL only) |
| Above both thresholds | 15% (9% undergrad + 6% PGL) |
Above the plan threshold AND above PGL threshold, every £1 of additional gross income attracts: - 9% undergrad - 6% PGL - Plus Income Tax (basic 20% / higher 40% / additional 45%) - Plus NI (8% / 2%)
A higher-rate Plan 2 + PGL borrower above £50,270 sees marginal rate of 9% + 6% + 40% + 2% = 57% on additional earnings. The student loan adds 15 percentage points to what would otherwise be 42%.
PGL interest
Interest tracks the same RPI-linked formula used for Plan 2: - Studying: RPI + 3% - Repayment: starts at RPI (at threshold), slides up to RPI + 3% above threshold
The interest doesn't change the 6% deduction; it changes the balance. With the 30-year write-off, most PGL borrowers won't fully repay before forgiveness.
When PGL writes off
30 years from first becoming repayable.
For a 2020 PGL graduate first repayable April 2021: write-off April 2051.
Voluntary repayment — PGL specific
Same logic as Plan 2: most won't fully repay, so voluntary lump sums often don't generate value. Exception: high-earning PGL borrowers (£70k+ stable) who project full repayment.
Self-employed PGL
For self-employed PGL borrowers, the calculation is annual via Self Assessment rather than per-period PAYE. Rate (6%) and threshold (£21,000) are the same; mechanism differs.
Mortgage / affordability impact
For Plan 2 + PGL borrowers on £45,000: combined SL deduction ~£250/month. Lenders treat this as a fixed monthly outgoing reducing effective disposable income — affordable mortgage capacity may be ~£25,000-£35,000 lower than the same gross salary without PGL.
Practical checklist
- Confirm PGL in SLC account alongside any undergrad plan
- Calculate threshold-relevant income (gross − salary-sacrifice pension)
- Apply PGL formula: max(0, income − £21,000) × 6%
- Apply undergrad formula separately
- Sum the deductions — this is your combined monthly student loan
- Use student loan calculator to model combinations
In short
UK Postgraduate Loan: 6% above £21,000 per pay period, runs in parallel with any undergrad plan. Combined rate above both thresholds is 15%. 30-year write-off. RPI-linked interest. Pension sacrifice helps but has limited scope at the £21,000 threshold. Use the student loan calculator to model combinations. For deeper PGL coverage see Postgraduate Loan →.