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 the PayslipIQ Editorial Team · 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 student loan repayment thresholds, 2026/27. Plan 2 is frozen at £29,385 until April 2030; Plan 5 is fixed at £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
Our main modelled study found that 13.7% of payslips with a student-loan deduction used the wrong plan. Around 512,000 new undergraduate loan-borrowers enter the workforce each year. If the national rate applied to that cohort, that is roughly:
~70,000 first-job payslips a year on the wrong plan
Working: 512,000 × 13.7% ≈ 70,000. This is an illustrative estimate, not a measured count — and the true figure for new starters is plausibly higher, because a first job is the exact moment the plan is set. See methodology 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
The 13.7% wrong-plan rate is from our modelled study of 10,000 synthetic UK PAYE payslips (see the UK Payslip Errors 2026 report). The ~70,000 figure is an illustrative application of that national rate to the new-graduate cohort, not a separate measurement. Thresholds are the published GOV.UK 2026/27 figures. This is educational, modelled analysis — not derived from individual user data. PayslipIQ does not store payslip content.
For journalists
All figures are free to cite with attribution to PayslipIQ and a link to this page. The thresholds, the national 13.7% rate and the illustrative estimate's arithmetic are all shown above. 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.