Plan 5 + Postgraduate Loan Stacking: Total Repayment Calculator
Last reviewed: 2026-09-20 · By Student Loan Calculator UK Editorial Team · Reviewed by Student Loan Calculator UK Editorial Team
Quick answer: Plan 5 (9% above £25,000) and Postgraduate Loan (6% above £21,000) are paid simultaneously, not as alternatives. For earnings above £25,000, you face a combined 15% student loan marginal rate. Both deductions appear as separate lines on your payslip and continue independently until each loan is cleared or written off.
The stacking rule explained
The UK student loan system treats undergraduate and postgraduate loans as separate obligations. If you took a Plan 5 undergraduate loan (English course starting on or after 1 August 2023; Plan 5 is England only) and then took a Postgraduate Loan (often called Plan 3) for a Master's or Doctoral degree, both loans are repaid in parallel through PAYE.
Postgraduate Loan repayments are paid IN ADDITION to any Plan 1/2/4/5 undergraduate repayments — not instead of them. A borrower with both deducts 9% above the undergrad threshold plus 6% above £21,000.
Plan 5 vs Postgraduate Loan: side-by-side facts
| Feature | Plan 5 | Postgraduate Loan |
|---|---|---|
| Threshold (2026-27) | £25,000/year | £21,000/year |
| Monthly threshold | £2,083 | £1,750 |
| Repayment rate | 9% above threshold | 6% above threshold |
| Interest | RPI only, with no margin during or after study. First repayments became due in April 2026. | RPI + 3%, capped at 6% from 1 September 2026 for the 2026/27 academic year, in England and Wales. |
| Current interest rate | 4.1% (RPI March 2026) | 6% (cap in force since 1 September 2026; would otherwise be 7.1%) |
| Write-off term | 40 years | 30 years |
Combined monthly repayment table
Below is the total monthly PAYE deduction for borrowers with both Plan 5 and a Postgraduate Loan (2026-27 tax year). For a personalised figure, use the monthly repayment calculator.
| Gross annual salary | Plan 5 monthly | PGL monthly | Combined monthly | Combined annual |
|---|---|---|---|---|
| £25,000 | £0 | £20 | £20 | £240 |
| £30,000 | £38 | £45 | £83 | £990 |
| £35,000 | £75 | £70 | £145 | £1,740 |
| £45,000 | £150 | £120 | £270 | £3,240 |
| £60,000 | £263 | £195 | £458 | £5,490 |
| £80,000 | £413 | £295 | £708 | £8,490 |
| £100,000 | £563 | £395 | £958 | £11,490 |
Worked example 1: £35,000 graduate trainee
A 2026 graduate with Plan 5 (£48,000 balance) and Postgraduate Loan (£12,000 balance) starts a graduate role at £35,000:
- Plan 5: (£35,000 − £25,000) × 9% = £900/year ÷ 12 = £75/month
- PGL: (£35,000 − £21,000) × 6% = £840/year ÷ 12 = £70/month
- Combined monthly deduction: £145 (£1740 annually)
At this salary the PGL accrues approximately £720 of interest per year (the 6% capped rate on a £12,000 assumed average balance) while £840 is repaid, so the PGL balance shrinks slowly year on year.
Worked example 2: £60,000 mid-career professional
Same borrower five years later earning £60,000:
- Plan 5: (£60,000 − £25,000) × 9% = £3,150/year = £263/month
- PGL: (£60,000 − £21,000) × 6% = £2,340/year = £195/month
- Combined monthly: £458 (£5490 annually)
The PGL balance starts shrinking once annual repayments exceed annual interest. At £60,000 salary, PGL repayments of £2,340 comfortably exceed interest accrual.
The 15% combined marginal rate
For every pound you earn above £25,000, you lose 15p to student loans before income tax and National Insurance take their cuts:
- Plan 5: 9%
- Postgraduate Loan: 6%
- Combined student loan marginal rate: 15%
- Plus income tax: 20% basic rate (40% higher rate)
- Plus employee National Insurance: 8% on most pay
- Effective marginal rate at £35,000-£50,270: 15% + 20% + 8% = 43%
- Effective marginal rate at £50,270-£100,000: 15% + 40% + 2% = 57%
Which loan to overpay first?
If you are confident of clearing both loans before write-off and have spare cash for voluntary overpayment, direct payments to the Postgraduate Loan first. Rationale:
- PGL carries RPI + 3%, capped at 6% from 1 September 2026, which is still higher than Plan 5's RPI-only rate of 4.1%.
- PGL write-off comes 10 years sooner (30 years vs 40), so the same balance reduction saves more interest per pound on PGL.
- Once PGL clears, your 6% deduction stops automatically, increasing take-home pay by £295/month at £80,000.
Stacking implications for big life decisions
- Mortgage affordability: Lenders typically reduce maximum borrowing by 4-5× the annual student loan deduction. Combined Plan 5 + PGL of £2,000/year cuts mortgage borrowing capacity by approximately £8,000-£10,000.
- Salary negotiation: A £5,000 pay rise above £25,000 only delivers £2,850 net at basic rate (after 15% loans, 20% tax, 8% NI). Be prepared to negotiate harder.
- Pension contributions: Maximising employer pension match and salary sacrifice reduces both loan deductions simultaneously, multiplying the financial benefit of pension saving.
- Self-employment switch: Both loans are recalculated on self-employment profit (after expenses), filed via Self Assessment. Quarterly tax payments include the combined student loan due.
How PAYE handles the stacking
Your employer receives separate notices from HMRC for each loan (a "Start Notice" for Plan 5 and another for Postgraduate Loan). Each deduction is calculated independently on the same gross pay figure against its own threshold. The two amounts appear as separate lines on your payslip:
Student Loan(Plan 5)Postgraduate Loan
When the Student Loans Company notifies HMRC that one loan is fully repaid, your employer receives a "Stop Notice" for that loan only. The other continues.
Stacking abroad
If you move overseas with both Plan 5 and PGL, both are assessed annually via the Overseas Income Assessment Form. The country-band thresholds apply to each loan independently using their respective UK thresholds (£25,000 for Plan 5, £21,000 for PGL). See our Plan 5 abroad guide for the full mechanics.
Related Plan 5 guides
- Plan 5 student loans: complete guide
- Monthly student loan repayment calculator
- Plan 5 optimisation guide
- Plan 5 for high earners
- Plan 5 during maternity leave
Frequently asked questions
Do Plan 5 and Postgraduate Loan repayments stack?
Yes. The Postgraduate Loan (often called Plan 3) is repaid in addition to any undergraduate plan, not instead of it. A borrower with Plan 5 plus Postgraduate Loan pays 9% above £25,000 AND 6% above £21,000 simultaneously through PAYE.
What is my combined marginal rate with Plan 5 + Postgraduate Loan?
For earnings above £25,000 you pay 9% Plan 5 + 6% Postgraduate Loan = 15% combined student loan deduction. Add income tax (20% basic, 40% higher) and National Insurance (8% on most pay) and your true marginal rate can reach 43% or higher.
Does PAYE show Plan 5 and Postgraduate Loan as one line or two?
Two separate lines. Your payslip will show "Student Loan" (Plan 5) and "Postgraduate Loan" as distinct deductions. HMRC reports both separately to the Student Loans Company for crediting against your respective balances.
Can I clear one loan before the other?
Yes. PAYE will continue deducting both until SLC notifies HMRC that one balance has been cleared. From that point, only the remaining loan is deducted. Voluntary overpayments can be directed to either loan at your choice.
If I am earning £35,000, what is my total combined repayment?
Plan 5: (£35,000 − £25,000) × 9% = £900/year (£75/month). PGL: (£35,000 − £21,000) × 6% = £840/year (£70/month). Combined: £1,740/year or £145/month. The two loans together deduct nearly £15 per month for every £1,000 you earn above £25,000.
Which loan accrues higher interest — Plan 5 or Postgraduate Loan?
Postgraduate Loan interest is RPI + 3%, capped at 6% from 1 September 2026 for the 2026/27 academic year. That is still higher than Plan 5's RPI-only rate of 4.1%. If you make voluntary overpayments and earn enough to clear loans before write-off, direct them to the Postgraduate Loan first.
When does each loan get written off?
Plan 5 is written off 40 years after the April following undergraduate course end. Postgraduate Loan is written off 30 years after the April following postgraduate course end. The write-off dates are independent — your PGL may be cleared by write-off years before your Plan 5.
Can I make voluntary overpayments to only one loan?
Yes. When making a voluntary payment through the Student Loans Company online account, you specify which loan it should be applied to. Most financially optimal: target the Postgraduate Loan first because it carries the higher interest rate.
Does salary sacrifice reduce both Plan 5 and PGL deductions?
Yes. Pension contributions and other salary sacrifice arrangements reduce your gross pay before student loan deductions are calculated. £10,000 sacrificed into a pension saves £900 in Plan 5 (9%) plus £600 in PGL (6%) = £1,500/year in combined student loan deductions, on top of the pension tax relief.
Sources: Department for Education — Plan 5 loans; Plan 5 repayment terms — gov.uk; Postgraduate loan — gov.uk; Repaying your postgraduate loan — gov.uk.