Student Loan Plan 1 vs Plan 2 vs Plan 5: Which Are You On? 2026

Which plan are you on?

Your student loan plan depends on when you started your course, where you lived, and which part of the UK your course was in. Here is the quick guide:

Northern Ireland has its own student finance arrangements — Northern Irish students broadly follow Plan 1 rules.

Plan 1: Pre-2012 borrowers

Plan 1 covers students who took out loans before the 2012 fee increase (when English/Welsh tuition fees rose to £9,000/year).

Key figures for 2026/27:

• Repayment threshold: £26,065/year (£2,172/month, £500.90/week)
• Repayment rate: 9% of earnings above the threshold
• Interest rate: RPI or Bank of England base rate + 1% — whichever is lower (historically low)
• Write-off: The earlier of age 65 OR 25 years after you became due to repay (April of the year after you left your course)

Example monthly deduction (Plan 1)

Salary £32,000/year → £32,000 − £26,065 = £5,935 above threshold → 9% × £5,935 = £534/year = £44.50/month

Plan 1 borrowers generally have lower outstanding balances and lower interest rates than Plan 2/5 borrowers. Many have already repaid in full or are close to doing so.

Plan 2: 2012–2023 English/Welsh borrowers

Plan 2 covers the large cohort of students who started courses in England or Wales between 2012 and July 2023 (under the £9,000-per-year tuition fee regime).

Key figures for 2026/27:

• Repayment threshold: £27,295/year (£2,274/month)
• Repayment rate: 9% of earnings above the threshold
• Interest rate: RPI + 0% to 3%, depending on income:
  • Earning under the threshold: RPI only
  • Earning between threshold and £49,130: RPI + up to 3% (sliding scale)
  • Earning over £49,130: RPI + 3%
• Write-off: 30 years after the April following your last year of study

Who actually repays in full?

Research by the Institute for Fiscal Studies (IFS) suggests fewer than 25% of Plan 2 graduates will fully repay their loan within 30 years. For most, the remaining balance will be written off. This has led many commentators to describe Plan 2 more as a graduate tax than a traditional loan — you pay 9% of earnings above the threshold for up to 30 years regardless.

Example monthly deduction (Plan 2)

Salary £35,000/year → £35,000 − £27,295 = £7,705 above threshold → 9% × £7,705 = £693/year = £57.75/month

Plan 5: 2023+ English/Welsh borrowers

Plan 5 applies to students starting courses in England or Wales from August 2023 onwards. It has a lower repayment threshold and a longer write-off period than Plan 2 — meaning borrowers pay more overall.

Key figures for 2026/27:

• Repayment threshold: £25,000/year (£2,083/month)
• Repayment rate: 9% of earnings above the threshold
• Interest rate: RPI only (no income-related surcharge — simpler than Plan 2)
• Write-off: 40 years after the April following your last year of study

Plan 5's lower threshold means graduates start repaying at lower income levels than Plan 2. A graduate earning £27,000 pays nothing under Plan 2 but pays 9% × £2,000 = £180/year under Plan 5.

The 40-year write-off means Plan 5 borrowers will repay for longer before any balance is wiped. Analysis suggests a significantly higher proportion of Plan 5 graduates will repay in full compared to Plan 2.

Example monthly deduction (Plan 5)

Salary £30,000/year → £30,000 − £25,000 = £5,000 above threshold → 9% × £5,000 = £450/year = £37.50/month

Plan 4: Scottish students

Plan 4 applies to Scottish students who took out loans through the Student Awards Agency Scotland (SAAS) from September 2021. The key difference from other plans is the significantly higher repayment threshold.

Key figures for 2026/27:

• Repayment threshold: £31,395/year (£2,616/month)
• Repayment rate: 9% of earnings above the threshold
• Interest rate: RPI or Bank of England base rate + 1% — whichever is lower
• Write-off: Age 65 or 30 years — whichever is first

Scottish students generally pay lower tuition fees (often £1,820/year for Scottish domiciled students at Scottish universities), meaning they borrow less and the higher threshold provides meaningful protection for lower earners.

Postgraduate Loan

Students who took out a Postgraduate Master's Loan or Doctoral Loan have a separate repayment arrangement:

• Repayment threshold: £21,000/year
• Repayment rate: 6% of earnings above the threshold
• Interest rate: RPI + 3%
• Write-off: 30 years

If you have both an undergraduate loan (Plan 1, 2, 4, or 5) and a Postgraduate Loan, both are deducted simultaneously. Your employer deducts undergraduate repayments first (9%), then postgraduate (6%), up to a combined maximum.

Side-by-side comparison

Should you overpay your student loan?

For many Plan 2 and Plan 5 borrowers, voluntary overpayments are financially counterproductive. If your projected earnings are moderate and the balance will likely be written off at the end of your term, every voluntary overpayment reduces a balance you would never have repaid anyway.

When overpaying might make sense:

• You are on Plan 1 with a small remaining balance close to write-off or repayment age.
• You are a high earner on Plan 2 who is certain to repay in full before the 30-year write-off — in this case, paying off sooner reduces overall interest.
• You have already paid off other higher-rate debts and maximised ISA/pension contributions.

The Student Loans Company will not give you a refund if you overpay. Consider the decision carefully before making lump-sum payments.