In several countries, student loan repayments come straight out of your pay once you earn above a threshold. They reduce take-home pay in a way that is easy to miss, and they work differently from an ordinary loan.
How repayments usually work
In the UK, repayments are a percentage of what you earn above a threshold, and the threshold and percentage depend on which plan your loan is under. The money is taken by your employer through payroll along with tax. Because it is a percentage of your income above a line, it rises as you earn more and falls to nothing if your pay drops below the threshold.
Why plans matter
UK plans, called Plan 1, Plan 2, Plan 4, Plan 5 and Postgraduate, have different thresholds and rates, and you can have more than one at a time. Our UK calculator covers these plans. Check which one applies to you on your loan statement or on the government's student finance website, because using the wrong plan changes your estimate.
The effect on a raise
Repayments add a few percentage points to the rate you pay on extra income, so a raise or bonus is worth a bit less than you might expect. It is still worth earning: you keep most of every additional pound. To see the exact effect, change your pay in the calculator and compare the net amounts with and without the student loan setting.
Is it like a normal loan?
Not exactly. The amount you repay depends on your income, not on how much you owe, and in some systems any remaining balance is written off after a set number of years. That means that for many people, paying extra does not always make financial sense. Whether it does depends on your plan, your income and your outlook, so read the official guidance or speak to an adviser before making extra payments.
Other countries
Australia has a similar income-linked system, repaid through the tax system. New Zealand loans are repaid through payroll above a threshold, and interest and overseas rules differ. Our calculators leave these out of some countries' estimates and say so on the page, so check official sources for current rates.
Check your payslip
Look for a line named student loan or similar. If you have paid off your loan, or have moved to a plan that no longer applies, tell your employer so the deduction stops. Repayments stop automatically only if the information reaches payroll.
Calculators for this guide
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These guides are general information and estimates to help you plan. They are not tax advice. Rules and rates change, so check the official tax authority for your country.