How this student loan calculator works
The calculator compares two ways of using spare money: overpaying your student loan, or making the minimum repayments and investing the difference. This guide explains how it does that, so you can judge how far to trust the answer.
What you enter
Your plan, your balance today, the tax year you first started repaying, your salary and how fast you expect it to grow, an extra amount to test (a one-off sum and a monthly amount), and the investment return you’d assume.
What it does
It steps forward one year at a time and runs the loan twice, once with only your compulsory repayments and once with your overpayment on top.
Each year it:
- Works out your income. Your salary grows at the rate you enter.
- Sets the threshold. It starts at your plan’s threshold and then assumes it changes over time. Plans can have their threshold frozen for some years at the start, after which it’s assumed to rise slowly.
- Adds interest. Interest is charged on the balance at your plan’s rate. For Plan 2 the rate depends on your income, using the GOV.UK formula.
- Takes the compulsory repayment. That’s your plan’s share of income above the threshold, capped at what you owe.
- Adds your overpayment, in the overpayment scenario, up to what’s left of the balance.
- Stops at the write-off date. Any balance still standing after your plan’s write-off period is cancelled. The write-off date comes from the tax year you say you first started repaying.
How investing is compared
In the investing scenario you make only the minimum repayments and invest the amounts you’d have overpaid, at the return you entered. The calculator then compares:
- the interest you avoid by overpaying, against
- the growth on the money if you’d invested it instead, and
- how much of your overpayment was really needed, given that the loan may be cancelled or cleared by your normal repayments anyway.
It shows the result as a modelled difference, and says so plainly when the two come out level. It also shows the year-by-year workings so you can check every step.
What it deliberately simplifies
- It works in whole years. Real repayments are calculated each pay period and interest is added monthly, so results are directional, not exact to the penny.
- It assumes steady salary growth. No career breaks, redundancy or job changes.
- It models one loan at a time. If you have two plans or a Postgraduate Loan as well, run each separately. See what if you have more than one student loan plan?
- Plan 2’s income-based interest follows GOV.UK’s formula, held steady. The rate is RPI plus up to 3% in proportion to your income, up to the cap, and the calculator applies that each year using the current RPI and cap. It doesn’t model the RPI-only rate charged during the year before your income is confirmed, or future changes in RPI. See how student loan interest works.
- Rates and thresholds are those for 2026–27, which change every year, and it can’t foresee future policy changes.
- Investing isn’t guaranteed. The return you enter is an assumption, not a forecast, and returns can be negative.
- It ignores tax on investments. How your investments are held affects what you keep.
Where the figures come from
Thresholds, rates and write-off periods come from GOV.UK and are stored in one data file that the calculator and these guides both read, and a monthly check compares them against the published sources. The About page says more about where the rules come from.
Use it well
The best use is to try several assumptions: a lower and higher salary, a lower and higher investment return, a different start year. If the answer flips with small changes, the decision is close, and other factors such as having an emergency fund or a pension match matter more. See should I overpay my student loan?