Our UK student loan calculator uses official Student Loans Company formulas and current regulations to provide accurate repayment estimates for Plan 1 and Plan 2 student loans. Here's how we calculate each component:
1. Income-Contingent Repayment Calculation
UK student loans use income-contingent repayment, meaning your payments are based on your income, not the loan amount:
Where:
- Annual Income = Your income before tax
- Repayment Threshold = Income level before repayment starts
- Repayment Rate = 9% for both Plan 1 and Plan 2
Example Calculation
For a Plan 2 borrower earning £35,000:
- Annual Income: £35,000
- Repayment Threshold: £27,295
- Repayable Income: £35,000 - £27,295 = £7,705
- Annual Repayment: £7,705 × 9% = £693.45
- Monthly Repayment: £693.45 ÷ 12 = £57.79
2. Plan 1 vs Plan 2 Differences
| Feature | Plan 1 | Plan 2 |
|---|---|---|
| Eligibility | Pre-2012 (England) or any time (Scotland, Wales, NI) | 2012 onwards (England) |
| Repayment Threshold | £22,015 | £27,295 |
| Write-off Period | 25 years | 30 years |
| Interest Rate | RPI (currently ~1.5%) | RPI + up to 3% (varies by income) |
| Repayment Rate | 9% | 9% |
3. Interest Rate Calculations
Interest rates vary by plan and income level:
Plan 1 Interest Rates
- Currently around 1.5%
- Updated annually in September
- Same rate regardless of income
Plan 2 Interest Rates
- £27,295 or less: RPI
- £27,296 - £49,130: RPI + graduated percentage (up to 3%)
- £49,131 or more: RPI + 3%
Interest Calculation
Interest is added to the loan balance monthly, increasing the total amount owed.
4. Repayment Schedule Generation
Our calculator generates a year-by-year repayment schedule:
- Calculate annual interest: Balance × Interest Rate
- Add interest to balance: New Balance = Old Balance + Interest
- Calculate annual repayment: (Income - Threshold) × 9%
- Apply repayment to balance: Final Balance = New Balance - Repayment
Monthly Breakdown
Within each year, we calculate monthly:
- Monthly interest addition
- Monthly repayment deduction
- Balance updates
5. Write-off Calculations
Loans are written off after a specified period:
- Plan 1: 25 years after graduation
- Plan 2: 30 years after graduation
- Any remaining balance is forgiven
- No further repayments required
Write-off Timeline
- Time starts from the April after graduation
- Periods of deferment may extend the timeline
- Repayments continue until write-off or full repayment
- No penalties for early repayment
6. Income Threshold Updates
Repayment thresholds are updated annually:
- Updated annually in April
- Based on average earnings growth
- Plan 1 and Plan 2 have different thresholds
- No repayments required below threshold
7. PAYE Integration
Repayments are automatically deducted through PAYE:
- Automatic deduction from salary
- Calculated by employer
- Based on current income
- No manual payment required
8. Regulatory Compliance
Our calculator follows UK student loan regulations:
Student Loans Company Guidelines
- Official repayment thresholds
- Current interest rate calculations
- Write-off period requirements
- Income-contingent repayment rules
Financial Conduct Authority (FCA)
- Clear and accurate disclosures
- Fair treatment of borrowers
- Transparent calculation methods
Consumer Credit Act
- Proper disclosure of terms
- Accurate interest calculations
- Clear repayment information
9. Export Functionality
Our calculator provides comprehensive export capabilities:
CSV Export Features
- Loan Information: Plan type, balance, interest rate
- Income Information: Annual income, thresholds
- Repayment Summary: Annual and monthly payments
- Repayment Schedule: Year-by-year breakdown
- Regulatory Notes: UK-specific compliance information
Professional Format
- Excel-compatible CSV format
- Proper currency formatting (£)
- Detailed repayment breakdown
- Regulatory compliance notes
- Legal disclaimers included
10. Calculation Accuracy Factors
Our calculator provides estimates based on current regulations. For the most accurate results:
- Use current balance from Student Loans Company
- Update income information regularly
- Consider future income growth
- Account for periods of unemployment
- Factor in threshold updates
- Consider interest rate changes
11. Limitations
This calculator has some limitations:
- Assumes constant income over the repayment period
- Does not account for career breaks or unemployment
- Uses current thresholds (may change annually)
- Simplified interest rate calculations
- Does not include postgraduate loan calculations
- Assumes current regulations remain unchanged
12. Advanced Features
Income Growth Projections
While our calculator uses current income, you can:
- Recalculate with different income levels
- See how income changes affect repayments
- Plan for future salary increases
- Consider career progression impacts
Write-off Scenarios
Our calculator shows:
- Years remaining until write-off
- Total amount likely to be repaid
- Whether loan will be paid off before write-off
- Impact of income changes on write-off
Important: This calculator provides estimates for planning purposes. Actual repayments may vary based on your specific circumstances and current regulations. Repayments are automatically deducted through PAYE. Interest rates and thresholds are updated annually. Always check with the Student Loans Company for your exact balance and repayment information.