Plan 1 mechanics (2026/27)
- Threshold: £26,065 per year
- Rate above threshold: 9%
- Calculation: per pay period through PAYE
Monthly threshold: £26,065 / 12 = £2,172.08 Weekly threshold: £26,065 / 52 = £501.25
Each pay period, PAYE calculates: (your earnings in this period) − (period threshold) × 9% = deduction.
Above the threshold, the deduction rounds DOWN to the nearest pound per period.
Who has Plan 1
Plan 1 applies to:
| Where you studied | When you started | Plan |
|---|---|---|
| England, Wales | September 1998 – August 2012 | Plan 1 |
| Scotland | Any time before September 2017 | Plan 1 |
| Northern Ireland | Any time since 1998 | Plan 1 |
If you also did postgraduate study with a Postgraduate Loan, that's separate (and additive) — see Postgraduate Loan →.
Worked example — Plan 1 on £30,000
Annual: - Above £26,065 = £3,935 - 9% deduction = £354/year
Monthly: - £30,000 / 12 = £2,500 gross monthly - Period threshold: £2,172.08 - Above threshold: £327.92 - 9% × £327.92 = £29.51 → rounds down to £29 - Monthly deduction: £29 - Annualised (× 12): £348 (small rounding differences from the annual view)
Worked example — Plan 1 on £50,000
Annual: - Above £26,065 = £23,935 - 9% × £23,935 = £2,154/year
Monthly: about £179. Combined with Income Tax + NI, total monthly deductions on £50,000 are roughly £1,200, leaving ~£3,000 take-home.
Plan 1 + another plan
If you have Plan 1 plus another undergrad plan, HMRC uses the lower threshold (Plan 1's £26,065 in most combinations) and you pay 9% above. Postgraduate Loan adds 6% above its £21,000 threshold separately.
Example: Plan 1 + PGL on £40,000: - Plan 1: above £26,065 = £13,935 × 9% = £1,254 - PGL: above £21,000 = £19,000 × 6% = £1,140 - Combined annual student loan: £2,394
Interest on Plan 1
Plan 1 interest is generally: - Bank of England base rate plus 1% - Capped at the rate of inflation (RPI)
The interest is added to your balance daily, but the deduction is fixed at 9% of income above threshold. Most Plan 1 balances grow modestly during repayment but typically don't outpace the deduction for borrowers earning around or above the threshold.
When Plan 1 writes off
Depends on when you started:
| Start year | Write-off |
|---|---|
| Pre-2006 (E&W and Scotland legacy) | Earlier of: age 65, or 25 years from first becoming repayable |
| 2006 onward (Plan 1 cohort) | 25 years from first becoming repayable |
"First becoming repayable" is the April after you graduated (or stopped your course).
For someone who graduated in 2010 and started repaying in April 2011: - Pre-2006 starter (impossible if graduated 2010 — would have started before 2005) - 2006+ starter: write-off in April 2036 (25 years)
After write-off, no further deductions apply and any remaining balance is forgiven. No credit impact, no penalty.
Read more about write-off rules →
The pension-sacrifice optimisation for Plan 1
For Plan 1 borrowers near the £26,065 threshold, salary sacrifice into pension can reduce or eliminate the student loan deduction:
Example: £28,000 salary, Plan 1 borrower
Without sacrifice: - Above £26,065 = £1,935 × 9% = £174/year student loan
With 7% salary sacrifice (£1,960 to pension): - Threshold-relevant income: £28,000 − £1,960 = £26,040 - Below £26,065 threshold → £0 student loan
The £1,960 sacrifice puts £1,960 into pension, saves £174 in student loan, and reduces Income Tax + NI. Net cost to take-home: roughly £1,000.
For borrowers earning between £26k and £32k, this combination of incentives makes pension sacrifice unusually attractive. Read more about salary sacrifice →
Plan 1 + Scottish residence
If you're on Plan 1 but now live in Scotland and earn primarily through Scottish PAYE, your tax bands are Scottish (different to rUK) but the student loan calculation is unchanged — Plan 1 threshold £26,065, rate 9%.
If you also took out loans in Scotland after 2017, you may have Plan 1 AND Plan 4 (or Plan 4 only depending on transition rules). Your Student Loans Company account confirms.
Voluntary repayment — is it worth it?
For most Plan 1 borrowers, voluntary lump-sum overpayments don't generate value because:
- Plan 1 interest is modest (typically below salary inflation)
- The 25-year write-off (post-2006) means many borrowers won't fully repay anyway
- Money invested elsewhere usually returns more than the Plan 1 interest rate avoided
Exceptions: borrowers very close to their write-off date with a near-zero balance, or borrowers who plan to make a large career-income change soon. Specific to circumstances; not advice.
In short
Plan 1 student loans repay at 9% above £26,065 for 2026/27, per pay period. Applies to pre-2012 E&W starters, pre-2017 Scotland, and most NI borrowers. Write-off at age 65 (pre-2006 starters) or 25 years (post-2006). Use the take-home calculator → to model. For the full reference, see the student loans hub →.