Postgraduate loan on GBP 45,000

Scenario

Take a £45,000 salary and model it with a standalone postgraduate loan. The 2025-26 postgraduate loan repayment rate is 6% on earnings above £21,000. This example shows the deduction in full and compares it with what Plan 2 would cost at the same salary.

Base take-home without a student loan

Personal allowance: £12,570. Taxable income: £32,430. All within the basic-rate band.

| Deduction | Calculation | Annual | Monthly | |---|---|---|---| | Income tax | £32,430 x 20% | £6,486 | £541 | | Employee NI | £32,430 x 8% | £2,594 | £216 | | Take-home | | £35,920 | £2,993 |

Adding the postgraduate loan

Postgraduate threshold: £21,000. Repayable income: £45,000 - £21,000 = £24,000.

Repayment: £24,000 x 6% = £1,440/year = £120/month.

| Deduction | Annual | Monthly | |---|---|---| | Income tax | £6,486 | £541 | | Employee NI | £2,594 | £216 | | Postgraduate loan | £1,440 | £120 | | Take-home with postgrad loan | £34,480 | £2,873 |

The postgraduate loan reduces take-home by £1,440 per year — £120 per month.

Effective combined rate

Total deductions: £6,486 + £2,594 + £1,440 = £10,520.

Effective combined rate: £10,520 / £45,000 = 23.4%.

Without any student loan the combined rate is 20.2%. The postgraduate loan adds 3.2 percentage points to the effective rate at this salary.

Postgraduate loan versus Plan 2 at £45,000

The postgraduate threshold (£21,000) is lower than the Plan 2 threshold (£27,295), but the repayment rate (6%) is lower than Plan 2 (9%). At £45,000 these two factors partially offset each other.

| | Postgraduate loan | Plan 2 | Difference | |---|---|---|---| | Threshold | £21,000 | £27,295 | Postgrad starts £6,295 earlier | | Repayable income at £45k | £24,000 | £17,705 | Postgrad is £6,295 higher | | Rate | 6% | 9% | Postgrad rate is lower | | Annual repayment | £1,440 | £1,593 | Postgrad is £153 less | | Monthly repayment | £120 | £133 | Postgrad is £13 less | | Take-home (after deduction) | £34,480 | £34,327 | Postgrad is £153 better |

At £45,000, the postgraduate loan actually costs £153/year less than Plan 2 would. The lower 6% rate outweighs the lower threshold.

How the postgraduate repayment builds across salary levels

| Gross salary | Repayable income | Annual repayment | Monthly repayment | |---|---|---|---| | £21,000 | £0 | £0 | £0 | | £25,000 | £4,000 | £240 | £20 | | £30,000 | £9,000 | £540 | £45 | | £35,000 | £14,000 | £840 | £70 | | £40,000 | £19,000 | £1,140 | £95 | | £45,000 | £24,000 | £1,440 | £120 |

The repayment grows by £60/year (£5/month) for every £1,000 of additional gross salary above £21,000.

What about holding both a postgraduate and an undergraduate loan?

Some graduates hold both a postgraduate loan and an undergraduate loan (Plan 2 or Plan 4) simultaneously. In that situation both repayments apply at the same time — each on its own threshold and rate — and deductions stack. At £45,000 the combined deductions would be:

• Plan 2: £1,593/year
• Postgraduate: £1,440/year
• Combined: £3,033/year = £253/month

That would reduce take-home to £35,920 - £3,033 = £32,887/year (£2,741/month).

PayPath currently models each loan type separately rather than in combination. If you hold both loan types, run each scenario independently and add the repayment lines together to estimate your combined deduction.

Practical interpretation

At £45,000 a standalone postgraduate loan costs £120/month — slightly less than Plan 2 at the same salary. The lower rate (6%) keeps the deduction manageable relative to income, but it still reduces take-home by nearly £1,500 per year. Anyone holding both loan types will see a combined deduction approaching £250/month at this salary, which is a significant planning variable for budgeting, salary negotiation, and salary sacrifice decisions.

Use the take-home pay calculator with the postgraduate option for a standalone estimate, then read Student loans and take-home pay, explained properly for the wider context and current calculator limitations.