Plan 4 mechanics (2026/27)
- Threshold: £33,795 per year
- Rate above threshold: 9%
- Calculation: per pay period through PAYE
Monthly threshold: £33,795 / 12 = £2,816.25 Weekly threshold: £33,795 / 52 = £649.90
Standard PAYE: 9% on earnings above the period threshold each pay period, rounded DOWN to the nearest pound.
Who has Plan 4
Plan 4 applies to:
- Scottish students who started university or further education from September 2017 onward through SAAS (Student Awards Agency Scotland)
Pre-2017 Scottish students are on Plan 1. Cross-border students (Scottish student studying in England) generally take their loan from their home nation, so a Scottish student at an English university typically has Plan 4.
Worked example — Plan 4 on £35,000
Annual: - Above £33,795 = £1,205 - 9% × £1,205 = £108/year
Monthly: £9. Very modest deduction reflecting the high threshold.
Worked example — Plan 4 on £50,000
Annual: - Above £33,795 = £16,205 - 9% × £16,205 = £1,458/year
Monthly: £121. Combined with Income Tax + NI on £50k at Scottish rates, total deductions are roughly £1,120/month.
Plan 4 vs Plan 2 — same job, different plans
A £40,000 salary:
- Plan 2 (E&W cohort): above £29,385 = £10,615 × 9% = £955/year
- Plan 4 (Scotland cohort): above £33,795 = £6,205 × 9% = £558/year
Plan 4 borrowers pay £397/year less on the same salary at this income level — a direct result of the higher Scottish threshold.
Once both plans are deducting, the gap stays the same at higher incomes: both deduct 9% above their threshold, so the difference is 9% of the £4,410 gap between the thresholds (£397).
Plan 4 interest
Plan 4 interest is set by the Scottish Government via SAAS:
- Base rate: Bank of England base rate + 1%
- Subject to caps in line with market conditions
- Generally lower than Plan 2 RPI-linked rates in low-RPI years, higher in high-RPI years
Interest is added daily to your balance but doesn't affect the monthly deduction (9% of income above threshold is fixed regardless of interest).
Plan 4 + PGL
If you did postgraduate study and took a Postgraduate Loan in addition to your Plan 4 undergrad:
| Salary | Plan 4 (9% above £33,795) | PGL (6% above £21,000) | Total |
|---|---|---|---|
| £35,000 | £108 | £840 | £948 |
| £45,000 | £1,008 | £1,440 | £2,448 |
| £55,000 | £1,908 | £2,040 | £3,948 |
The PGL rules apply identically regardless of which undergrad plan you have. Note: PGL is England-only via SLC; Scottish postgrads typically don't have it.
Salary sacrifice on Plan 4
Same optimisation as other plans — sacrifice into pension reduces threshold-relevant income.
For a Plan 4 borrower on £35,000:
Without sacrifice: - Above £33,795 = £1,205 × 9% = £108/year
With 4% sacrifice (£1,400): - Threshold-relevant income: £33,600 - Below £33,795 → £0 student loan
The £1,400 sacrifice eliminates the student loan deduction (£108) while contributing to pension and saving £406 in Income Tax + NI at Scottish rates. Net cost to take-home: about £886.
When Plan 4 writes off
30 years from the April you first became repayable.
For someone who graduated in 2021 and started repayments in April 2022, write-off is April 2052.
Why Plan 4 exists — the Scotland separation
Plan 4 is Scotland's Student Loan plan. It was introduced in 2021 when the Student Loans Company separated Scottish borrowers from Plan 1 (which historically covered England, Wales, Scotland and Northern Ireland pre-1998, and Scotland post-1998 up to 2020). If you took a Scottish undergraduate student loan and started repaying on or after 6 April 2021, you're on Plan 4. If you started repaying before that date, you were automatically transferred from Plan 1 to Plan 4 at that point.
Plan 4 vs the other plans at a glance
| Plan | Who | 2026/27 threshold | Rate above threshold |
|---|---|---|---|
| Plan 1 | Pre-2012 England/Wales, some NI | £26,900 | 9% |
| Plan 2 | 2012+ England/Wales | £29,385 | 9% |
| Plan 4 | Scottish (post-1998, repaying from 2021+) | £33,795 | 9% |
| Plan 5 | 2023+ England | £25,000 | 9% |
| Postgrad Loan | UK postgrad | £21,000 | 6% |
The Plan 4 threshold is the highest of the current UK plans. That's a Scottish policy choice — reflect the higher cost-of-living in some Scottish cities, and align with SAAS's undergraduate finance settlement.
How Plan 4 shows on a Scottish payslip
If you live and work in Scotland with Plan 4, three things happen on payday:
- Income Tax applied at Scottish rates and bands (Starter → Basic → Intermediate → Higher → Advanced → Top). Your tax code will have an S prefix (e.g. S1257L).
- National Insurance applied at the UK-wide rate — NI is not devolved.
- Plan 4 student loan deducted at 9% of gross pay above £649.90 per week (or £2,816.25 per month, or the £33,795 annual threshold).
The Plan 4 deduction shows on your payslip as "Student Loan", not "Plan 4". You can check which plan you're on by logging into your Student Loans Company account.
Combining Plan 4 with a Postgraduate Loan
If you have both a Scottish undergraduate Plan 4 loan and a Postgraduate Loan, both are deducted separately: 9% of pay above £33,795 for Plan 4, plus 6% of pay above £21,000 for the Postgrad Loan. That combined rate can reach 15% marginal on the slice of pay above £33,795 — worth being aware of when modelling take-home from a promotion.
Overpayments and early repayment
Plan 4 has no early-repayment penalty. If you clear the balance mid-year, tell your employer and confirm with the Student Loans Company; otherwise employer deductions may continue for months after the loan is paid off (you'd get any excess refunded, but it's clunky). If you're within a year of clearing the balance, ask SLC to switch you to direct debit for the final period.
In short
Plan 4 is the Scottish student loan plan for 2017+ SAAS borrowers. Threshold £33,795 (highest of any UK plan) with 9% rate above. 30-year write-off. Interest tracks Bank rate + 1%. Use the take-home calculator → to model. For the full reference, see the student loans hub →.