Overpaying a student loan only saves money if you would have repaid it in full before it is written off. On a typical Plan 2 balance of £45,000, a graduate earning £30,000 repays about £49,000 over 30 years and has £80,000 written off, so every pound overpaid is a pound given away; a graduate earning £80,000 clears the loan in twelve years and pays £20,000 of interest, so overpaying saves real money. The dividing line sits around £55,000 to £60,000 of salary for Plan 2 and around £45,000 for Plan 5. Overpayments cannot be refunded, so the decision needs the projection first.
Who clears the loan
| Plan and balance | Salary now, rising 3% a year | Interest rate | Outcome | Total repaid |
|---|---|---|---|---|
| Plan 2, £45,000 | £30,000 | 4.2% | Never clears; £80,275 written off after 30 years | £49,114 |
| Plan 2, £45,000 | £40,000 | 5.5% | Never clears; £45,887 written off after 30 years | £91,932 |
| Plan 2, £45,000 | £60,000 | 6.0% | Clears in year 19 | £81,841 |
| Plan 2, £45,000 | £80,000 | 6.0% | Clears in year 12 | £64,866 |
| Plan 2, £45,000 | £100,000 | 6.0% | Clears in year 8 | £58,649 |
| Plan 5, £50,000 | £30,000 | 4.1% | Never clears; £44,442 written off after 40 years | £113,583 |
| Plan 5, £50,000 | £45,000 | 4.1% | Clears in year 25 | £88,429 |
| Plan 5, £50,000 | £70,000 | 4.1% | Clears in year 13 | £66,536 |
| Plan 1, £15,000 | £30,000 | 4.1% | Clears in year 21 | £25,597 |
| Plan 1, £15,000 | £40,000 | 4.1% | Clears in year 12 | £19,481 |
Repayments are 9% of income above the plan threshold, £29,385 on Plan 2, £25,000 on Plan 5 and £26,900 on Plan 1, and they depend only on salary, not on the balance. That is why the £40,000 earner on Plan 2 repays £91,932, nearly twice what they borrowed, and still has £45,887 written off: repayments never catch the interest. For that graduate an overpayment reduces the amount written off and nothing else. The student loan overpayment calculator runs the projection for your own balance, salary and plan.
How interest is charged
| Plan | Interest in 2026/27 |
|---|---|
| Plan 1 | 4.1% |
| Plan 2 | 4.1% for income up to £29,385, rising on a sliding scale to 7.1% at £52,885, capped at 6% from 1 September 2026 to 31 August 2027 |
| Plan 4 | 4.1% |
| Plan 5 | 4.1% |
| Postgraduate Loan | 6% |
Plan 2 is the only plan whose rate depends on income, and the cap means every Plan 2 borrower earning above about £44,000 currently pays 6%. The student loan interest calculator shows the rate and the annual interest for your salary and balance, and our student loan thresholds guide sets out the thresholds and write-off periods for each plan.
When overpaying makes sense
The case for overpaying is strongest for graduates on Plan 1 or Plan 5 with high salaries, small balances and a clear path to repaying in full, and for Plan 2 borrowers earning £60,000 or more. For them the loan is a 4.1% to 6% debt like any other, and paying it down saves interest at that rate with certainty. A £10,000 lump sum against the £45,000 Plan 2 balance takes the £60,000 earner from clearing in year 19 to year 15 and cuts total repayments from £81,841 to £65,254 including the lump sum, a saving of about £16,600; for the £80,000 earner the same overpayment saves about £8,300 and three years. Even then the comparison with alternatives matters: a pension contribution with tax relief and employer matching returns more than 6%, a mortgage at 4.5% offers a comparable risk-free return with more flexibility, and an ISA can be drawn on in an emergency where a loan overpayment cannot. Our guide on overpaying a mortgage or investing sets out the comparison.
When it does not
Anyone who will not clear the loan should never overpay: the balance is written off regardless, and the only effect of overpaying is to reduce the amount the government writes off. Salary growth changes the picture, so a graduate on £35,000 who expects to be earning £70,000 within a decade may end up repaying in full and should revisit the projection as pay rises. A career break, part-time work or a move abroad also alter the outcome. Because voluntary payments cannot be reclaimed, the safer course for anyone near the dividing line is to save the money in an ISA and decide later, once the trajectory is clearer.
Practical points
Overpayments are made through the Student Loans Company online account or by bank transfer, in any amount, and are applied to the balance immediately. They do not reduce the 9% PAYE deduction, which continues at the same rate until the balance is cleared, so someone who overpays still sees the same amount leave each payslip. Graduates close to clearing should switch to direct debit for the final two years to avoid over-repaying through PAYE, and anyone who has over-repaid can claim a refund. Repayments start the April after leaving the course, and the repayment start calculator gives the date and the first deduction for any course end date and salary.
Common questions
Should I overpay my student loan? Only if you will repay it in full before the write-off. On Plan 2 that generally means a salary of £60,000 or more; below that most graduates have part of the loan written off and overpaying loses money.
What is the Plan 2 interest rate in 2026/27? 4.1% for income up to £29,385, rising to 7.1% at £52,885, but capped at 6% between 1 September 2026 and 31 August 2027.
Will my student loan be written off? Plan 1 after 25 years, Plan 2 and Plan 4 after 30 years and Plan 5 after 40 years, counting from the April repayments were due to start.
Can I get an overpayment back? No. Voluntary repayments to the Student Loans Company are not refundable. Over-repayments made by mistake through PAYE after the loan is cleared can be reclaimed.
Does overpaying reduce my monthly repayments? No. Repayments are 9% of income above the threshold whatever the balance. Overpaying shortens the time until the loan is cleared.
Is a student loan a debt like a credit card? Not in the usual sense. It does not appear on credit files, repayments stop when income falls, and it is written off after a fixed period, which is why it is often described as a graduate tax.
Information, not financial advice. Interest rates and thresholds are the published 2026/27 figures on gov.uk: repaying your student loan; projections are from the site’s calculator assuming 3% annual salary growth and current interest rates held constant, which will not be exactly what happens. Check your own balance and projection with the Student Loans Company before overpaying.