Student loan Plan 2 vs Plan 5
You don't choose your plan: it depends on when you started university. In England, courses starting from 1 September 2012 to 31 July 2023 are Plan 2, and from 1 August 2023 they're Plan 5. Here's how they differ.
| Plan 2 | Plan 5 | |
|---|---|---|
| Repayment threshold 2026/27 | £29,385 a year (£2,448 a month). Frozen from April 2027 for 3 years (England) | £25,000 a year (£2,083 a month). Due to rise with RPI from April 2027 |
| You repay | 9% of income over the threshold | 9% of income over the threshold |
| Interest after you leave | RPI up to RPI + 3%, depending on income (currently 4.1% to 6%) | RPI only (currently 4.1%) |
| Written off | 30 years after the April you're first due to repay | 40 years after the April you're first due to repay |
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What this means
- Plan 5 repays more each month on the same salary, because its threshold is lower. On £30,000, that's 9% of £5,000 (£450 a year) on Plan 5, against 9% of £615 (about £55 a year) on Plan 2.
- Plan 5 has lower interest (RPI only), but a 40-year term, so many more Plan 5 borrowers will repay in full.
- For many graduates, a student loan works more like a 9% graduate tax than a debt: what you pay depends on your income, not the balance. Overpaying only makes sense if you're likely to clear the loan before it's written off.
Sources: GOV.UK: how much you repay, when your loan is written off, terms and conditions 2026 to 2027. The projection is a rough guide. It assumes today's interest rates, a frozen Plan 2 threshold until 2030 then 3% a year, and the Plan 5 threshold rising 3% a year from 2027. Real RPI will differ.
Free calculator: Student loan repayment calculator (all plans)
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Is Plan 5 worse than Plan 2?
On the same salary, Plan 5 borrowers repay more each year (the threshold is £25,000, not £29,385) and for up to 40 years instead of 30. But Plan 5 interest is lower (RPI only), and many of these borrowers are expected to repay their loan in full.
Can I switch from Plan 2 to Plan 5?
No. Your plan is set by when and where you started your course. You can't choose or change it.
When does Plan 2 get written off?
30 years after the April you were first due to repay. For Plan 5, it's 40 years.
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