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Student loan guide: income-based repayment, interest and write-off

How income-contingent student loans differ from instalment loans, how interest and indexation work, when a balance is written off, with UK and US examples.

Reviewed by CentExactRates effective 15 sourcesCalculated in your browser. Shared links include inputs.

How the result is calculated

Student loans come in two kinds, and which one you have decides almost everything about the result. An instalment loan is repaid like any other loan: a level monthly payment that clears the balance and its interest over a fixed term. The American standard plans, Canada's federal loan, a JASSO scholarship loan, a Finnish or Indian bank loan and Sri Lanka's interest-free scheme all work this way, and Germany's BAföG is a fixed 130 euros a month with the rest waived after 77 instalments.

An income-contingent loan ignores the balance when it sets the payment. Britain's plans take 9% of what you earn above a threshold, New Zealand 12%, Australia's HELP a marginal share of repayment income, and the American Repayment Assistance Plan a share of your whole income by band. The balance meanwhile grows with interest, or with indexation in Australia, so whether the loan is ever repaid depends on your earnings as much as on what you borrowed, and many British loans reach their write-off date first.

The calculator runs the scheme month by month from the first repayment: it adds the month's interest, takes the month's payment, and stops when the balance reaches zero or the write-off date arrives. An instalment loan goes through the same amortisation schedule a mortgage does; an income-contingent one is projected with your pay rising at the rate you set.

payment each monthshare × max(0, income − threshold) ÷ 12

balance next monthbalance × (1 + rate ÷ 12) − payment

income
your gross income for the year, growing at the pay rise you set
threshold
the scheme's repayment threshold for that year
share
9% for most British plans, 6% for a postgraduate loan, 12% in New Zealand, 4% under the Dutch SF35
rate
the scheme's interest rate, charged on the balance each month
An instalment loan replaces the first line with the level payment that clears the balance over the term. Whatever is owed on the write-off date is cancelled.

Worked example

Worked exampleThe calculator's opening figures: a 45,000 Plan 2 balance on a 35,000 salary, pay rising 3% a year
ItemAmountHow it is obtained
Income over the threshold£5,615£35,000 − £29,385
First year's repayment£505.329% of £5,615, £42.11 a month
Interest in the first year4.82%RPI of 4.1% plus 3% × 5,615 ÷ 23,500
Repaid over 30 years£34,266the threshold is frozen to April 2030, then assumed to rise 3% a year
Written off after 30 years£140,894interest outpaces the repayments throughout

Try it with these figures

The payment is the same whether you owe 20,000 or 80,000, which is why a Plan 2 borrower on a middle income can repay far less than they borrowed and still pay the scheme for its whole thirty years. A borrower on 70,000 would clear the same balance years before the write-off date.

Worked exampleThe Department of Education's example: a single borrower earning 45,000 on the Repayment Assistance Plan
ItemAmountHow it is obtained
Income band4%AGI of more than 40,000 and up to 50,000
Monthly payment$150.004% of $45,000 ÷ 12, no dependants
Interest in the first month$196.376.52% on the balance after six months' grace interest
Interest waived$46.37the part the payment leaves; ED's $40 is on the $35,000 before grace interest
Principal paid that month$50.00the government's match, so the balance always falls

Try it with these figures

Worked exampleA 12,000 BAföG loan in Germany
ItemAmountHow it is obtained
Repayment cap€10,01077 instalments of €130
Waived at the start€1,990the part above the cap
Monthly instalment€130billed quarterly as €390
Total repaid€10,010interest-free, over six years and five months

Try it with these figures

Reading the result

The headline is the monthly repayment in the first year. Under an income-contingent scheme it rises with your pay, so the schedule shows each year's figure; under an instalment loan it stays level. Below it are the total you repay, the interest or indexation added over the life of the loan, the month the loan ends and anything written off. When the end is a write-off, the written-off figure is not a debt you still owe: it is what the scheme absorbs, and it is often larger than what you borrowed because interest has kept running.

The chart splits each year's repayments into principal and interest. A year in which the interest band fills the whole bar is a year in which your payments did not touch what you borrowed.

What changes the result

Your income

Under an income-contingent plan income is the whole story. Below the threshold you pay nothing at all, and every pound above it adds 9 pence a year in Britain. A pay rise therefore shortens the loan rather than raising a fixed bill, and on the US Repayment Assistance Plan it can move you into the next band, where the percentage applies to your whole income.

Interest and indexation

Britain charges RPI on Plans 1, 4 and 5 and up to 3% more on Plan 2 as income rises, capped at 6% until August 2027. Australia indexes HELP once a year by the lower of inflation and wage growth. Canada's federal loan, BAföG, a JASSO type 1 loan, New Zealand for residents and Sri Lanka's scheme charge nothing. The calculator holds today's rate for later years, because nobody can know them; change it where the field is open to see how much a different rate would matter.

The term and the write-off date

An instalment loan's term is set by the scheme or chosen within its limits: 10 to 25 years by balance for the new American standard plan, up to 14.5 years in Canada, up to 15 years for an Indian education loan. Income-contingent loans end on a date instead: 25, 30 or 40 years in Britain, 35 years under the Dutch SF35, 20 to 30 years under the American income-driven plans. Australia's and New Zealand's never write off on a schedule.

What is not included

The projection assumes you repay every month from the first due date with no breaks, overpayments, deferments or periods abroad. It uses one income for one borrower, so it does not include a partner's income, which the Dutch and American plans can count, or the income-based reductions you apply for, such as CSN's or Canada's Repayment Assistance Plan. Forgiveness tied to a job, such as Public Service Loan Forgiveness, is left out, as are tax deductions for interest, which lower your tax rather than the repayment.

Using the result

If your loan is income-contingent, compare the total repaid with the write-off figure before deciding whether to overpay: when the loan is on course to be written off, extra payments only reduce what the scheme would have cancelled anyway. If it is an instalment loan, the total interest is the cost of time, and a shorter term or a lower rate cuts it directly. Either way, check the threshold, rate and balance on your latest statement against the inputs, since those three figures move the answer more than anything else.

Questions and answers

Short answers to the questions people bring to this calculator, each with the figures to try and, where one exists, the official source to check.

9% of what you earn above the threshold, which is 29,385 a year for 2026-27 and is frozen at that level until April 2030. On 33,000 a year that is 9% of 3,615, about 27 a month. What you owe does not change the payment, only how long it lasts.

Check the source: GOV.UK: Repaying your student loan, what you pay

Data sources

Every rate, threshold and index the calculator uses is read from a dataset that records where it came from and when it applies. The list below is that record.

  1. United Kingdom: student loan plans 1, 2, 4, 5 and postgraduate, 2026-27

    GOV.UK: Repaying your student loan, what you pay; GOV.UK: Student loans interest rates and repayment threshold announcement, August 2026; GOV.UK: How interest is calculated, Plan 2; GOV.UK: When your student loan gets written off or cancelled; HMRC: Special rules for student loans (employer guidance); DfE: Student loan forecasts for England, methodology.

    Effective 1 September 2026 onward. Retrieved 18 October 2026. Within its effective period.

    Repayment thresholds and rates for 2026-27 are read from the UK tax-year dataset (tax:uk:2026-27), so the take-home pay calculator and this one cannot disagree. Interest from 1 September 2026: RPI of 4.1% on Plans 1, 4 and 5; Plan 2 from RPI up to RPI plus 3% by income between 29,385 and 52,885, and Postgraduate at RPI plus 3%, both capped at 6% until 31 August 2027. The Plan 2 threshold is frozen at 29,385 until April 2030 (DfE forecasting methodology, after the November 2025 Budget).

    How we checked these figures

    Thresholds and rates pinned to HMRC's employer figures and the gov.uk examples: Plan 1 on 28,000 a year repays 8 a month, Plan 2 on 33,000 repays 27. Payroll rounds each deduction down to whole pounds; this calculator works in pence on annual income.

  2. United States: Direct loan repayment plans after Public Law 119-21

    Public Law 119-21, section 82001; Federal Register: RISE final regulations (91 FR 23768); eCFR: 34 CFR 685.208 repayment plans; Federal Register: Interest rates for fixed-rate federal student loans, 2026-27 (91 FR 57581); U.S. Department of Education: Fact sheet, simplifying student loan repayment (9 June 2026); Federal Register: 2026 HHS poverty guidelines (91 FR 1797).

    Effective 1 July 2026 onward. Retrieved 18 October 2026. Within its effective period.

    Loans made from 1 July 2026 have two plans: the Tiered Standard plan (10, 15, 20 or 25 years by balance) and the Repayment Assistance Plan, which takes 1% to 10% of total AGI by $10,000 band, less 50 dollars a month per dependant, with a 10 dollar minimum, waives unpaid interest, matches principal up to 50 dollars and forgives the rest after 360 payments. Loans made earlier keep the 10-year standard, graduated, extended and income-based plans; PAYE and ICR close on 1 July 2028 and the SAVE plan was ended by court order in March 2026.

    How we checked these figures

    Pinned to the Department's fact sheet of 9 June 2026: a single borrower earning 45,000 pays 150 a month under RAP against 176 under IBR, and a 30,000 balance pays 341 over 10 years against 262 over 15. The Department states no rate for those examples; 6.52% reproduces them to the dollar.

  3. Australia: HELP debt repayment, 2026-27

    ATO: Study and training support loans rates and repayment thresholds; ATO: Study and training support loans indexation rates.

    Effective 1 July 2026 onward. Retrieved 18 October 2026. Within its effective period.

    Compulsory repayments are read from the Australian tax-year dataset (tax:au:2026-27): nothing below 69,528 of repayment income, 15% of income above it, 9,028 plus 17% above 129,717, and 10% of the whole income from 186,050, the marginal system in force since the 2025-26 income year. HELP charges no interest; the balance is indexed each 1 June by the lower of CPI and WPI. The 2.8% indexation for 1 June 2026 is reported by StudyAssist but could not be read on ato.gov.au, so it is an editable assumption here.

    How we checked these figures

    ato.gov.au refused automated reads, so the 2026-27 bands are those of the tax-year dataset and secondary sources that agree with them (15% of 129,717 less 69,528 is the 9,028 base).

  4. New Zealand: student loan repayments for New Zealand-based borrowers

    Inland Revenue: Repaying my student loan when I earn salary or wages; Inland Revenue: Student loan interest and fees.

    Effective 1 April 2026 onward. Retrieved 18 October 2026. Within its effective period.

    Repayments are read from the New Zealand tax-year dataset (tax:nz:2026-27): 12% of income over 24,128 a year. New Zealand-based borrowers pay no interest. Borrowers based overseas pay 5.6% interest for the 2027 tax year and fixed minimum repayments by balance, which are not modelled. Inland Revenue had not yet stated a 2027 tax-year threshold; 24,128 is the figure it shows.

  5. Canada: Canada Student Loans and the Ontario portion of OSAP, 2026

    Government of Canada: Repaying your student loans, payment options; Government of Canada: When to start repaying; Government of Canada: Repayment Assistance Plan; Government of Ontario: Pay back OSAP; Bank of Canada: Policy interest rate.

    Effective 1 April 2023 onward. Retrieved 18 October 2026. Within its effective period.

    The federal Canada Student Loan has been permanently interest-free since 1 April 2023. Repayment starts after a six-month non-repayment period and runs 114 months (9.5 years) by default, extendable to 174 months. The Ontario part of an OSAP loan is charged prime plus 1%, from the six-month grace period on. Other provinces' rules were not verified and are not offered. A borrower whose family income is below the Repayment Assistance Plan threshold (3,866 a month for one person) can pay nothing or a reduced amount; that plan is not modelled.

    How we checked these figures

    Ontario's illustrative table (20,000 at 5%: 226 a month over 9.5 years, 167 over 14.5) is not reproduced by a 5% monthly annuity, which gives 220.75; it matches 5.5%, so it is not used as a test figure. The 114-month default term is from the NSLSC, which could not be read; Ontario's 9.5-year example agrees with it.

  6. Sweden: CSN annuitetslån, 2026

    Studiestödslag (1999:1395), 4 kap.; CSN: Ränta och avgifter; CSN: Nytt studielån för alla som får lån från 2022; CSN: Hur har ni räknat ut vad jag ska betala tillbaka?.

    Effective 1 January 2026 onward. Retrieved 18 October 2026. Within its effective period.

    Studiestödslag 4 kap.: the yearly amount (årsbelopp) is worked out from the debt, the year's interest and the years left, so that payments rise by 2% a year, over 25 years or until the year you turn 64 (60 for loans paid before 2022), and never below 15% of the price base amount (8,880 in 2026). Interest is 2.135% in 2026. CSN does not publish its formula, and the growing annuity the law describes comes out a few per cent above CSN's own illustrative examples, so treat the yearly amount as an estimate. Income-based reduction to 5% of income is by application and is not modelled.

    How we checked these figures

    CSN's illustrative examples (about 217,000 with 15 years left giving 14,148 in 2025) could not be reproduced from the statute, and CSN publishes no formula; the engine follows the statute.

  7. Netherlands: DUO studieschuld, SF35 and SF15, 2026

    Wet studiefinanciering 2000, hoofdstuk 6; DUO: Terugbetalingsregels; DUO: Berekening maandbedrag; DUO: Rente.

    Effective 1 January 2026 onward. Retrieved 18 October 2026. Within its effective period.

    Wet studiefinanciering 2000, articles 6.5 to 6.16: two years with no payments (the aanloopfase), then 35 years (SF35) or 15 years (SF15) of monthly payments, each the lower of the instalment that clears the debt and the draagkracht, 4% (SF35) or 12% (SF15) of income above the threshold. 2026 thresholds for a single borrower without children are 26,819.42 (SF35) and 22,528.31 (SF15); with a partner or as a single parent 38,351.77 and 32,183.30. Interest is 2.33% (SF35) and 2.29% (SF15) for 2026, fixed for five years. What is left at the end is written off.

    How we checked these figures

    DUO publishes no worked example of the monthly amount; the draagkracht figures follow DUO's 2026 thresholds and the Wsf 2000 text.

  8. Germany: BAföG Staatsdarlehen repayment, 2026

    BAföG § 17 Förderungsarten; BAföG § 18 Darlehensbedingungen; Bundesverwaltungsamt: BAföG Tilgungsplan.

    Effective 1 April 2020 onward. Retrieved 18 October 2026. Within its effective period.

    At a Hochschule half of BAföG is a grant and half an interest-free state loan (§ 17 Abs. 2). It is repaid in instalments of at least 130 a month, billed quarterly as 390, starting five years after the end of the maximum funding period (§ 18 Abs. 3, 4 and 7). After 77 monthly instalments the rest is waived (§ 18 Abs. 13), so nobody first funded from 1 September 2019 repays more than 10,010. Income-based deferral and the early-repayment discount are not modelled.

  9. Japan: JASSO type 1 and type 2 scholarship loans, 2026

    JASSO: Repayment period and instalments; JASSO: Repayment examples, university; JASSO: Lending rates by month; JASSO: How the interest rate is set.

    Effective 1 September 2026 onward. Retrieved 18 October 2026. Within its effective period.

    JASSO sets the number of monthly payments from the total borrowed: the total divided by the base amount of its band, rounded down, gives the years, at most 20. Type 1 loans are interest-free and type 2 bear interest at the rate for the month the loan ended, at most 3% (3.000% fixed and 2.400% reviewable for September 2026). Repayment starts in the seventh month after the loan ends. JASSO's type 2 examples run about 1% above a plain annuity because interest accrues between the end of the loan and the first payment; the calculator adds six months' simple interest for that, which JASSO does not document.

    How we checked these figures

    Type 1 is pinned to JASSO's 返還例: 1,440,000 yen is 156 payments of 9,230 yen, 2,160,000 is 168 of 12,857. JASSO's type 2 method for interest before the first payment is not published, so type 2 is not pinned to its examples.

  10. Finland: state-guaranteed student loan (opintolaina), 2026

    Kela: Opintolaina ja pankit; Kela: Opintolainan takaisinmaksaminen; Kela: Opintolainahyvitys.

    Effective 1 August 2024 onward. Retrieved 18 October 2026. Within its effective period.

    Kela guarantees a bank loan of up to 850 a month for a higher-education student (from 1 August 2024), for up to 30 years. The bank sets the interest and the repayment plan, so both are editable assumptions here. A first degree finished within the target time earns opintolainahyvitys: 40% of the loan above 2,500, counting at most 400 a month of loan, paid to the bank tax-free (6,200 at most for a 300-credit degree). Government proposal HE 177/2026 would change the compensation for studies starting from 1 August 2027.

  11. India: education loans under the IBA model scheme, 2026

    PIB: PM Vidyalaxmi scheme backgrounder (29 July 2026); Canara Bank: IBA Model Education Loan Scheme; State Bank of India: Education loan interest rates.

    Effective 6 November 2024 onward. Retrieved 18 October 2026. Within its effective period.

    Education loans are bank loans: under the IBA model scheme and PM Vidyalaxmi there is a moratorium of the course period plus one year, then EMIs over up to 15 years on a reducing balance. Simple interest during the moratorium, added to the loan when repayment starts, is the usual practice (secondary sources; the IBA scheme document was not read). The rate is the bank's: 10.15% is SBI's Student Loan rate without collateral from 15 October 2026. Interest subvention under PM Vidyalaxmi (3% for family income up to 8 lakh) and CSIS (in full up to 4.5 lakh) reduces the moratorium interest and is not modelled.

  12. Sri Lanka: Interest Free Student Loan Scheme (IFSLS), 2026

    Ministry of Higher Education: Interest Free Student Loan Scheme, FAQ; Ministry of Higher Education: Interest Free Student Loan Scheme.

    Effective 17 August 2026 onward. Retrieved 18 October 2026. Within its effective period.

    The IFSLS lends students at non-state higher education institutes up to Rs 1,500,000 for course fees, by degree stream, plus an optional stipend; the government pays the interest for the whole 12-year loan period. After a one-year grace period the loan is repaid in 84 equal monthly instalments for a four-year degree or 96 for a three-year degree. The 11th intake opened on 17 August 2026. Instalment rounding is not published.

  13. UK income tax (rUK and Scotland), Class 1 National Insurance and student loans, 2026/27

    GOV.UK, Rates and thresholds for employers 2026 to 2027; GOV.UK, Income Tax rates and Personal Allowances; GOV.UK, Repaying your student loan: what you pay.

    Effective 6 April 2026 to 5 April 2027. Retrieved 29 August 2026. Within its effective period.

    Income tax for England, Wales and Northern Ireland and, separately, the six Scottish bands. Employee Class 1 National Insurance at 8% between the primary threshold and upper earnings limit and 2% above. Personal allowance, band thresholds and NI thresholds remain frozen at 2025/26 levels. Pension contributions are modelled for the three payroll methods (relief at source, net pay and salary sacrifice), and student loan repayments for Plans 1, 2, 4, 5 and postgraduate. Marriage allowance, blind person's allowance, benefits in kind and NI categories other than A are not modelled.

  14. Australia: individual income tax, Medicare levy, LITO, HELP and superannuation, 2026-27

    ATO, Tax rates for Australian residents; ATO, Medicare levy reduction for low-income earners; ATO, Medicare levy surcharge income thresholds and rates; ATO, Study and training support loans rates and repayment thresholds; ATO, Super guarantee percentage; ATO: income tests, including reportable super contributions in MLS and HELP repayment income.

    Effective 1 July 2026 to 30 June 2027. Retrieved 29 August 2026. Within its effective period.

    Financial year 2026-27, in which the second marginal rate falls from 16% to 15%. Covers resident, foreign-resident and working-holiday-maker scales, the Medicare levy with its low-income phase-in, the Medicare levy surcharge for people without private hospital cover, the low income tax offset and compulsory HELP repayments. Medicare levy family thresholds, SAPTO, Division 293 and offsets other than LITO are not modelled; superannuation is reported separately because it is paid on top of salary rather than deducted from it.

  15. New Zealand: PAYE, ACC earners' levy, KiwiSaver and student loan, 2026-27

    Inland Revenue, Deductions from salary and wages; Inland Revenue, Independent earner tax credit (IETC); Inland Revenue, Changes to the KiwiSaver contribution rate; MBIE, Setting the average ACC levy rates for 2025-26 to 2027-28.

    Effective 1 April 2026 to 31 March 2027. Retrieved 29 August 2026. Within its effective period.

    Tax year 2026-27. Two things changed on 1 April 2026: the ACC earners' levy rose to 1.75% with a higher maximum liable earnings, and the default KiwiSaver employee rate rose from 3% to 3.5% (rising again to 4% in April 2028). Working for Families, secondary tax codes, ESCT on the employer's KiwiSaver contribution, child support deductions and the end-of-year square-up are not modelled.

    How we checked these figures

    Bands and thresholds are the published Inland Revenue figures; vectors are computed from them and should be re-checked against the IRD PAYE calculator when it is updated for 2026-27.

CentExactCalculator publisher

CentExact publishes the calculation method, worked examples and available data sources. Automated checks cover reference calculations; they do not certify a result for your circumstances or imply approval by a lender or tax authority.

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This calculator is for general information only and is not financial advice. Results are estimates based on the figures you enter and the stated formula; lenders and providers may round or calculate differently. Check any decision with the institution involved or a qualified adviser.