The £28k Trap: Why a UK Degree Might Not Pay Off

The average starting salary for a UK graduate in 2026 is roughly £28,000.

On paper, this sounds respectable. It’s above minimum wage. It’s a “professional” salary.

But financially, £28,000 is a dangerous number.

It sits in a specific “dead zone” of the UK student finance system—high enough to trigger repayments, but too low to cover the interest. The result is a lifetime of stagnant debt and reduced borrowing power.

We ran the numbers using our Student Loan Calculator. Here is the reality.

1. The Math of £28k

If you are on Plan 5 (students starting 2023+), your repayment threshold is £25,000. You pay 9% of everything above this.

• Gross Salary: £28,000
• Taxable Income: £28,000 - £12,570 (Personal Allowance)
• Loan Repayment Income: £28,000 - £25,000 = £3,000
• Annual Repayment: 9% of £3,000 = £270/year (£22.50/month).

The Interest Problem

Your debt is likely around £45,000 (Tuition + Maintenance). The interest rate (RPI) is currently around 4%.

• Annual Interest Added: £1,800.

The Trap: You are paying £270, but your debt is growing by £1,800.

Every year you work hard and pay your “graduate tax,” your total debt increases by £1,530. You are running on a treadmill that is speeding up.

2. The Lifetime Cost (40 Years)

Under Plan 5, the write-off period is 40 years.

If your salary grows at the national average (3%), you will never pay off the capital. Instead, you will pay that 9% tax for your entire working life.

Age	Salary	Loan Balance	You Pay (Annual)
21 (Grad)	£28,000	£45,000	£270
31	£37,000	£62,000	£1,080
41	£50,000	£85,000	£2,250
51	£67,000	£115,000	£3,780
61 (End)	Write-off	£0	Total Paid: ~£80k+

Verdict: You pay back £80,000+ over your career for a loan that successfully bought you a £28k job. That is a terrible ROI.

3. The Mortgage Impact

This is the hidden cost. When you apply for a mortgage, the bank looks at your net monthly income. Because of that £270-£3,000/year deduction, your “affordability check” is reduced.

• Without Degree: You might borrow £200,000.
• With Degree: You might only borrow £175,000.

In a housing market where every penny counts, your degree effectively shrinks the size of the house you can buy.

4. When is it Worth It?

The system is designed so that high earners pay it off, and low earners pay nothing. The “middle squeeze” is where the pain is.

To beat the math, you need to break out of the £28k-£45k band quickly.

• Target Salary: £55,000+ by age 30.
• Target Sector: Tech, Finance, Specialized Law.

If your degree leads to a job capped at £35k (e.g., some administrative roles, generic marketing), you are arguably strictly worse off than a non-graduate who has no debt tax.

Conclusion

If you are earning £28k, do not blindly overpay your student loan. The interest is growing faster than you can fight it. Instead, treat it as a 9% tax and focus on increasing your income.

Simulate your own future: Use our calculator to see if you will ever hit the “Write Off” date.