Plan 3 student loan: what it actually is

It is not missing from the list. Plan 3 is the Postgraduate Loan, under a name almost nobody uses.

Students & graduates · 2026/27 rules

If you have searched for "Plan 3 student loan" and been told it does not exist, that is wrong. Plan 3 is real, it is active, and you may well be repaying it right now under a different name.

Why two names for the same thing

The undergraduate plans are numbered in the order they were introduced: Plan 1, Plan 2, Plan 4 for Scotland, and Plan 5 for courses from August 2023. Plan 3 sits in that sequence as the postgraduate product, introduced for the 2016/17 academic year.

In practice the number is used in policy documents and HMRC guidance, while payroll software and the SLC use the descriptive name. Your payslip will almost certainly show PGL rather than Plan 3.

This matters when you read the news. Announcements about "Plan 2 and Plan 3" loans — including the interest rate cap of 6% from 1 September 2026 — apply to postgraduate debt, even though your loan account never uses that wording.

How Plan 3 differs from undergraduate loans

The £21,000 threshold has been frozen since the loan was introduced in 2016 and is the lowest of any UK student loan plan, so repayments start earlier than on any undergraduate plan.

It stacks on top of your undergraduate loan

This is the part that surprises people most. If you hold two undergraduate plans, 9% is deducted once, on income above the lower threshold. A Postgraduate Loan is different — its 6% is deducted in addition to any undergraduate repayment, as a separate line.

On a £35,000 salary with both Plan 2 and a Postgraduate Loan:

• Plan 2: 9% of (£35,000 − £29,385) = £505 a year
• Plan 3: 6% of (£35,000 − £21,000) = £840 a year
• Combined: roughly £1,345 a year, about £112 a month

Note that the postgraduate deduction is the larger of the two, despite the lower percentage, because the threshold is so much lower.

Why your balance may grow despite repaying

Postgraduate loans charge RPI plus 3% from the day the first payment is made — including while you are still studying — with no income-based sliding scale. That is the maximum rate charged on any plan, applied to everyone regardless of earnings. From 1 September 2026 it is capped at 6% for the 2026/27 academic year.

On a Master's loan of around £13,000, interest at roughly 6% adds about £780 a year to the balance. Repayments at 6% of income above £21,000 only exceed that once you earn somewhere above the mid-£30,000s. Below that, the balance grows each year even though you are paying every month.

That sounds alarming and mostly is not, for the reason below.

Write-off, and why overpaying is usually wrong

Plan 3 balances are written off 30 years after the April following the end of your course. At that point whatever remains is cancelled, with no tax charge and nothing to pay. Loans are also written off on death, or if you receive a disability-related benefit and are permanently unfit for work.

Because the monthly repayment is fixed at 6% of income above the threshold regardless of the balance, a higher interest rate does not change what you pay each month — only the balance, which for many borrowers is written off before it is ever cleared. Overpaying only helps if you would otherwise clear the loan in full before the 30 years are up, which generally requires sustained high earnings. For most graduates the same money does more in a pension or ISA.

Who can get one

Postgraduate Loans are for students domiciled in England or Wales taking an eligible Master's or Doctoral course, from 2016/17 onwards for Master's and 2018/19 for Doctoral. You must be under 60 at the start of the course. The money is paid directly to you in instalments rather than to your university, and it is not means-tested against household income. Current maximum amounts are published on gov.uk and change with the academic year.

Two smaller points

• Repayment start date. Repayments begin in the April after your course ends, regardless of when you started work.
• Not on your credit file. Like all UK student loans, a Postgraduate Loan does not appear on your credit report — though mortgage lenders do count the monthly deduction as a committed outgoing.

Common questions