PayslipIQ Data · Modelled
Thousands of graduates are repaying their student loan on the wrong plan
If you started university in England in or after August 2023, you are on Plan 5 — but payroll systems still routinely default new starters to Plan 1 or Plan 2. The deduction looks normal on the payslip, so almost nobody checks.
By Rocco Clayfield, Founder and Editor · Published 12 June 2026
The one thing to check
Find the plan number next to the student-loan line on your payslip. If you started an English degree from August 2023, it should say Plan 5.
Anything else is worth questioning — especially Plan 1 or Plan 2, the two most common wrong defaults for recent graduates.
2026/27 repayment thresholds, all five plans
| Plan | Repay above | Rate | Who is on it |
|---|---|---|---|
| Plan 1 | £26,900 | 9% | Most English/NI courses started before Sept 2012; some older Scottish/Welsh. |
| Plan 2 | £29,385 | 9% | English/Welsh undergraduate courses started Sept 2012 to July 2023. |
| Plan 4 | £33,795 | 9% | Scottish students (SAAS). |
| Plan 5 | £25,000 | 9% | English undergraduate courses started on or after 1 August 2023. |
| Postgraduate Loan | £21,000 | 6% | Master's and doctoral loans (runs alongside Plan 1/2/4/5). |
Source: GOV.UK, Repaying your student loan: what you pay (2026/27 figures, verified at publication). The Plan 2 threshold is currently frozen at £29,385; Plan 5 remains £25,000.
How the wrong plan ends up on your payslip
When you start a job you complete a starter checklist. If the wrong loan box is ticked — or if payroll software still defaults to the older Plan 2 — your deduction is calculated against the wrong threshold from day one. Because Plan 5 (£25,000) sits below Plan 2 (£29,385), a Plan 5 graduate wrongly placed on Plan 2 repays nothing when they should be repaying, so the payslip looks fine and the error goes unnoticed. Placed on Plan 1 (£26,900) instead, they over-deduct in the £25,000–£26,900 band. Multiple jobs and agency work make it more likely still.
How common is it? An illustrative estimate
In our main modelled study, 13.7% of simulated payslips with a student-loan deduction used the wrong plan — a modelling assumption, not a measured rate. The Department for Education forecasts around 506,000 undergraduate loan-borrowing entrants in the 2025/26 academic year (Student loan forecasts for England). If the modelled rate applied to that cohort as they enter work, that would be roughly:
~69,000 first-job payslips a year on the wrong plan
Working: 506,000 × 13.7% ≈ 69,000. This is an illustrative estimate built on a modelled assumption, not a measured count. It could be higher for new starters (a first job is the exact moment the plan is set, via the Starter Checklist) or lower (if the assumed 13.7% overstates reality). See methodology and limitations below.
How to fix it
- Check the plan number on your payslip against the plan you actually hold.
- Confirm your correct plan in your online student finance account or at gov.uk/repaying-your-student-loan.
- If they differ, tell your payroll team and contact HMRC — HMRC issues the correct start or stop notice to payroll. No awkward conversation about your balance is needed; payroll never sees it.
Methodology & limitations
This page combines three ingredients with very different evidential weight. In order of solidity:
- Verified published figures. The repayment thresholds and rates in the table above are the published GOV.UK 2026/27 figures (gov.uk/repaying-your-student-loan/what-you-pay), and the 506,000 entrant figure is the Department for Education's forecast of undergraduate loan-borrowing entrants for the 2025/26 academic year (Student loan forecasts for England). Both were checked at publication.
- A modelled assumption. The 13.7% wrong-plan rate comes from our modelled study of 10,000 synthetic UK PAYE payslips (see the UK Payslip Errors 2026 report, including its full methodology and limitations). It is an error-injection assumption in that model, not a rate published by HMRC or the Student Loans Company, and no public source measures wrong-plan frequency at payslip level.
- Illustrative arithmetic. The ~69,000 figure simply multiplies (1) by (2). It is not a measurement, and it inherits all the uncertainty of the assumed rate: if the true wrong-plan rate is half our assumption, the figure halves.
Further limitations: the national modelled rate is applied to a new-graduate cohort whose true rate may differ in either direction (first jobs are where the Starter Checklist is completed, so errors may be more common; but new Plan 5 borrowers also have less legacy-plan confusion). The entrant forecast covers England; Scottish, Welsh and Northern Irish borrowers follow different plans and funding bodies. This is educational, modelled analysis — not derived from individual user data. PayslipIQ does not store payslip content.
Cite this page
Suggested citation:
PayslipIQ (2026). Graduate student-loan plan errors 2026 (illustrative modelled estimate; thresholds per GOV.UK 2026/27). Published 12 June 2026. https://payslipiq.co.uk/data/graduate-student-loan-errors-2026
Link policy: free to cite with attribution and a link to this page. The thresholds may be cited as fact (they are GOV.UK figures); the 13.7% rate and the ~69,000 figure must be described as modelled or illustrative estimates, not findings from observed payslips.
For journalists
All figures are free to cite with attribution to PayslipIQ and a link to this page. The thresholds, the modelled 13.7% rate and the illustrative estimate's arithmetic are all shown above — please keep the words "modelled" or "illustrative" attached to the rate and the ~69,000 figure. Contact: press@payslipiq.co.uk.
Common questions
Which student loan plan should a 2025 graduate be on?
If you started an English undergraduate course on or after 1 August 2023 you are on Plan 5, where repayments start above £25,000 in 2026/27. English or Welsh courses started between September 2012 and July 2023 are usually Plan 2 (£29,385). Scottish students are Plan 4 (£33,795).
What happens if I am on the wrong plan?
You may over- or under-repay. Placed on a higher-threshold plan than you should be, you repay nothing when you actually should be repaying; placed on a lower one, you over-deduct. HMRC reconciles it eventually, but it is worth correcting now so your payslip is right.
How do I check my plan?
The plan number is shown on your payslip next to the student-loan deduction, and in your online student finance account. If the two do not match, ask your payroll team and confirm the correct plan with HMRC.
Will my employer see my student loan balance?
No. Payroll only sees the plan type and deducts a percentage of pay above the threshold. They do not see your outstanding balance.
Related
Disclaimer
Educational guidance only. Figures are modelled or published estimates, not advice and not derived from individual payslips. Verify your plan with HMRC and the Student Loans Company before acting. See our Privacy notice and Trust Centre.