Glossary · UK
What is Plan 2 Student Loan?
The UK student loan plan for English and Welsh students who started university between September 2012 and 2023, repaid at 9% of income above £29,385 in 2026/27.
Full Definition
Plan 2 covers undergraduate and most postgraduate healthcare student loans taken out by students from England and Wales who started their course between 1 September 2012 and 31 July 2023. Repayments are 9% of income above the Plan 2 threshold (£29,385 for 2026/27, uprated each April in line with average earnings), collected via PAYE or Self Assessment. Interest is charged on a sliding scale linked to RPI, ranging from RPI alone for lower earners up to RPI plus 3 percentage points for higher earners, which means Plan 2 balances can grow faster than they are repaid for many graduates on average salaries. Any remaining balance is written off 30 years after the April the borrower first became liable to repay. From 1 August 2023, new English students instead take out Plan 5 loans, which have a lower repayment threshold but a shorter interest rate (fixed at RPI) and a longer 40-year write-off period, so Plan 2 remains relevant only to graduates who started their course before that cutover date.
How Plan 2 Student Loan is calculated
Monthly repayment = 0.09 x max(0, Annual income - 29385) / 12- 29385
- Plan 2 annual repayment threshold for 2026/27 (GBP).
- 0.09
- Repayment rate applied to income above the threshold.
Worked example: On a salary of GBP 35,000, income above the threshold is 35,000 - 29,385 = GBP 5,615. Annual repayment is 9% x 5,615 = GBP 505.35, or about GBP 42.11 a month.