Student Loan Plan 2 vs Plan 5 Repayment: What Is the Difference? UK 2026

Most graduates who started their undergraduate degree in England after 2012 are on Plan 2. Students who started from August 2023 onwards are on Plan 5. Both plans charge 9% of income above a threshold, but the thresholds and write-off periods differ significantly -- and those differences compound dramatically over a career. This guide explains what each plan means for your take-home pay in 2026.

The Core Rules Side by Side

Plan 2 (started 2012-2022)

• Repayment threshold: GBP 28,470 per year (GBP 2,372.50/month)
• Rate: 9% on income above the threshold
• Write-off: 30 years after the April following graduation (typically around age 51-52)
• Interest: RPI + up to 3% while studying; RPI + 0-3% based on income in repayment (RPI has been capped for 2024 and 2025)

Plan 5 (started August 2023 onwards)

• Repayment threshold: GBP 25,000 per year (GBP 2,083.33/month)
• Rate: 9% on income above the threshold
• Write-off: 40 years after the April following graduation (typically around age 61-62)
• Interest: RPI only (no premium above RPI)

How Much Do You Repay Each Month?

The monthly deduction is simple: 9% of gross income above the threshold, divided by 12.

At a salary of GBP 30,000 per year:

• Plan 2: 9% x (GBP 30,000 - GBP 28,470) = GBP 137.70/year = GBP 11.48/month
• Plan 5: 9% x (GBP 30,000 - GBP 25,000) = GBP 450/year = GBP 37.50/month

At a salary of GBP 40,000 per year:

• Plan 2: 9% x (GBP 40,000 - GBP 28,470) = GBP 1,037.70/year = GBP 86.48/month
• Plan 5: 9% x (GBP 40,000 - GBP 25,000) = GBP 1,350/year = GBP 112.50/month

At a salary of GBP 60,000 per year:

• Plan 2: 9% x (GBP 60,000 - GBP 28,470) = GBP 2,837.70/year = GBP 236.48/month
• Plan 5: 9% x (GBP 60,000 - GBP 25,000) = GBP 3,150/year = GBP 262.50/month

The GBP 3,470 gap between thresholds translates to roughly GBP 26/month at any salary level. That is the constant difference -- Plan 5 always costs more per month at the same salary.

The Write-Off Period: Where the Real Difference Lies

The write-off period is where Plan 5 becomes significantly more costly for many borrowers. Plan 2 borrowers who graduated in 2023 will see their debt wiped in 2054. Plan 5 borrowers who graduated in 2027 will not see write-off until 2068.

For high-earning graduates, this rarely matters -- they will repay the full loan within 10-15 years regardless. But for average and lower earners, the write-off is often the end point, not full repayment.

The Institute for Fiscal Studies has estimated that under Plan 5, a greater proportion of borrowers will repay more in total than under Plan 2, because the longer write-off period means interest accrues for longer and lower-earning borrowers make payments for more years before the balance is cancelled.

Interest Rates

Plan 2 has historically carried RPI plus a supplement of up to 3% for higher earners. Plan 5 charges RPI only -- no income-based supplement. In a high-inflation environment, Plan 5 interest grows faster in absolute terms simply because the balance is larger for longer, but the rate itself is lower than Plan 2 for comparable earners.

Combined Student Loan Scenarios

Some graduates have both an undergraduate Plan 2 loan and a Postgraduate Loan. The Postgraduate Loan is repaid separately at 6% above GBP 21,000, running concurrently. If you have both, you could be paying 9% (Plan 2) + 6% (Postgraduate) = 15% of earnings above GBP 21,000 above the Postgraduate threshold.

Does It Make Sense to Overpay?

For most Plan 2 borrowers on average salaries, overpaying is rarely mathematically justified because the balance is likely to be written off before it is fully repaid. For Plan 5 borrowers with the 40-year window, the calculation is more borderline. If you earn a consistently high salary, overpaying saves interest. If you expect to earn below the threshold for long periods (career breaks, part-time work), letting the debt ride to write-off may be the better option.

Key Thresholds to Remember for 2026/27

• Plan 2 threshold: GBP 28,470
• Plan 5 threshold: GBP 25,000
• Postgraduate threshold: GBP 21,000
• Plan 1 (pre-2012, Scotland/Northern Ireland): GBP 24,990

Your employer deducts student loan repayments through PAYE alongside income tax and NI. The deductions appear on your payslip and your P60 confirms the annual total.

Use the CalcHub take-home pay calculator to see exactly how your student loan plan affects your monthly net pay alongside income tax and National Insurance.