Student Loan Calculator 2025: How Much Will You Really Pay Back?
Ultimate Salary Calculator Team
Our content is written and reviewed by finance and tax enthusiasts to ensure accuracy.
Starting university is exciting, but the financial reality can be daunting. With tuition fees hitting £9,535 for 2025/26 and living costs soaring, many students and parents are asking the same question: "How much will this actually cost me?"
The answer isn't straightforward. Unlike a traditional loan, student loans work more like a graduate tax – and most people will never pay back the full amount. Let's break down exactly how much you'll really pay and when.
The New Student Loan Landscape in 2025
The student finance system has seen significant changes recently, affecting how much you'll borrow and repay:
Current Costs (2025/26 Academic Year)
- Tuition fees: Up to £9,535 per year (increased from £9,250)
- Maintenance loan: £10,227-£13,944 depending on location and family income
- Total borrowing: Around £75,000-£85,000 for a three-year degree
Key Changes for 2025 Starters
- Repayment threshold: £25,000 (Plan 5 loans)
- Interest rate: RPI + 3% while studying, RPI + 0-3% after graduation
- Repayment period: 40 years (increased from 30 years)
- Repayment rate: 9% of income above the threshold
Understanding the Different Student Loan Plans
Not all student loans are created equal. Which plan you're on depends on when and where you studied:
Plan 1 (Pre-2012 Students)
- Repayment threshold: £24,990
- Interest rate: Lower of RPI or Bank of England base rate + 1%
- Written off: After 25 years or at age 65
Plan 2 (2012-2023 Students)
- Repayment threshold: £27,295
- Interest rate: RPI + 0-3% based on income
- Written off: After 30 years
Plan 4 (Scottish Students)
- Repayment threshold: £31,395
- Interest rate: RPI + 1%
- Written off: After 30 years
Plan 5 (2023+ Students)
- Repayment threshold: £25,000
- Interest rate: RPI + 3% while studying, variable after
- Written off: After 40 years
Real-World Student Loan Examples
Let's look at what graduates actually pay based on their career earnings:
Example 1: Primary Teacher (Starting salary £28,000)
Loan details: £80,000 total debt, Plan 5
- Monthly repayment: £22.50 (£3,000 × 9% ÷ 12)
- Annual repayment: £270
- Likely outcome: Loan written off after 40 years
- Total repaid: ~£35,000 (less than half the original debt)
Example 2: Graduate Accountant (Starting £35,000, rising to £60,000)
Loan details: £75,000 total debt, Plan 5
- Year 1 repayment: £900 annually
- Mid-career repayment: £3,150 annually (at £60k salary)
- Likely outcome: Pays back around 60% of debt
- Total repaid: ~£45,000
Example 3: Software Developer (Starting £45,000, rising to £80,000+)
Loan details: £85,000 total debt, Plan 5
- Year 1 repayment: £1,800 annually
- Mid-career repayment: £4,950 annually (at £80k salary)
- Likely outcome: Pays back full amount plus interest
- Total repaid: ~£120,000-£140,000
Example 4: Doctor (Long training, high eventual earnings)
Loan details: £120,000+ total debt (including postgraduate study)
- Junior doctor years: £450-£900 annually
- Consultant level: £7,200+ annually
- Likely outcome: Pays back significantly more than borrowed
- Total repaid: £200,000-£300,000+
The Truth About Student Loan Interest
Student loan interest is often misunderstood. Here's what actually happens:
While Studying (Plan 5)
- Interest rate: RPI + 3% (currently around 6-7%)
- Your loan grows: Even if you don't spend a penny, your debt increases
- Don't panic: This is normal and expected
After Graduation
Your interest rate depends on your income:
- Up to £25,000: RPI only (currently ~3-4%)
- £25,000-£45,000: RPI + sliding scale up to 3%
- Over £45,000: RPI + 3%
The Interest Reality
For most graduates, the interest rate doesn't matter much because:
- 70% of graduates never pay back their loans in full
- Interest accrual is capped at the amount that would be paid back anyway
- It's more like a tax than a traditional debt
When Student Loans Get Written Off
This is where student loans differ dramatically from other debts:
Automatic Write-Off Conditions
- After 40 years (Plan 5) or 30 years (Plans 1, 2, 4)
- At age 65 (Plan 1 only)
- On permanent disability (all plans)
- On death (all plans – not passed to family)
What This Means: If you borrowed £80,000 and only paid back £40,000 over 40 years, the remaining £40,000 simply disappears. No bailiffs, no impact on your credit score, no consequences.
How Student Loans Affect Your Take-Home Pay
Student loan repayments are automatically deducted from your salary, just like tax and National Insurance:
Salary Breakdown Example (£35,000 annual salary, Plan 5)
- Gross salary: £35,000
- Income tax: £4,486
- National Insurance: £2,324
- Student loan: £900
Take-home: £27,290
The 9% Rule
You pay 9% of everything you earn above the threshold:
- Earn £26,000: Pay 9% of £1,000 = £90/year
- Earn £30,000: Pay 9% of £5,000 = £450/year
- Earn £40,000: Pay 9% of £15,000 = £1,350/year
Student Loans and Life Events
Getting Married
Your student loan repayments are based on your income only, not household income. Getting married doesn't change your payments.
Having Children
- Maternity leave: Repayments stop if income drops below threshold
- Part-time work: Payments reduce proportionally
- Career breaks: No repayments during unpaid leave
Buying a House
Student loans don't appear on your credit file, but mortgage lenders will consider the 9% repayment when assessing affordability.
Emigrating
If you move abroad, you're still liable for repayments based on UK equivalent salary thresholds. The Student Loans Company is getting better at international collection.
Should You Pay Off Your Student Loan Early?
For most people, the answer is no. Here's why:
The Mathematics
- Average graduate: Will never pay back the full amount
- Early repayment: Means paying money you'd never have to pay anyway
- Opportunity cost: Money invested elsewhere could grow more than you save
When Early Repayment Makes Sense
- Very high earners: Who will definitely pay back the full amount plus interest
- Psychological benefit: If the debt causes stress (though remember it's not really debt)
- Inheritance planning: If you have significant assets and want to reduce the outstanding balance
The 'Sweet Spot' Calculation
Financial advisors suggest early repayment only makes sense if:
- You're likely to earn consistently over £50,000
- You'll definitely pay back more than you borrowed
- You have no other debts or pressing financial goals
Student Loan Myths Debunked
Myth 1: "Student debt will ruin my credit score"
Truth: Student loans don't appear on credit files and don't affect your credit score.
Myth 2: "I should avoid university because of the debt"
Truth: University graduates earn on average £100,000+ more over their careers than non-graduates.
Myth 3: "My children will inherit my student debt"
Truth: Student loans are automatically written off on death – they're never passed to family.
Myth 4: "I can avoid repayments by staying unemployed"
Truth: The Student Loans Company can track income and will pursue repayments on any earnings above the threshold.
Calculate Your Take-Home Pay
Use our salary calculator to see exactly how much you'll take home after student loan repayments:
Making Informed Decisions
The key to student loan planning is understanding that this isn't traditional debt. For most graduates:
- It's more like a tax that you pay for 40 years maximum
- The majority will never pay it back in full
- It shouldn't prevent you from pursuing higher education
- The benefits of university usually far outweigh the costs
Remember, the average university graduate earns significantly more over their lifetime than non-graduates, even after accounting for student loan repayments.
Your Next Steps
- Use our calculator to model your specific situation
- Research your course and career prospects carefully
- Apply for all available grants and scholarships
- Budget for living costs to minimize borrowing
- Don't let student loans stop you from pursuing your goals
The student loan system is designed to be affordable – you only pay when you can afford to, and it never becomes unmanageable. Focus on choosing the right course and university for your future career, not on the headline debt figure.
Use our student loan calculator above to see exactly how much you'll pay based on your expected earnings and remember – for most people, student loans are much more affordable than they first appear.