Student loan Plan 2 vs Plan 5: thresholds, repayments, interest and write-off
Plan 2 and Plan 5 both take 9% of your income above a threshold, but the thresholds, the interest and the point at which any balance is written off are different. Here is what GOV.UK says about each plan for 2026/27, with repayments worked out at a range of salaries.
Which plan are you on?
You cannot choose your repayment plan; it depends on where you applied and when your course started. If you have more than one loan you could be on different plans. For students who applied to Student Finance England, GOV.UK says:
- Course started on or after 1 August 2023: Plan 5 for an undergraduate course, a PGCE, an Advanced Learner Loan or student finance through the Lifelong Learning Entitlement. (A Higher Education Short Course Loan is Plan 2.)
- Course started between 1 September 2012 and 31 July 2023: Plan 2 for an undergraduate course, a PGCE, an Advanced Learner Loan or a Higher Education Short Course Loan.
- Course started before 1 September 2012: Plan 1.
If you applied to Student Finance Wales and started on or after 1 September 2012, you are on Plan 2 (Plan 1 before that). Students from Scotland (SAAS) are on Plan 4 and from Northern Ireland on Plan 1. Master's and doctoral loans in England and Wales are on a separate Postgraduate Loan plan. You can check by signing in to your online account and downloading your "active plan type letter".
Plan 2 and Plan 5 side by side
| Plan 2 | Plan 5 | |
|---|---|---|
| Yearly threshold (2026/27) | £29,385 | £25,000 |
| Monthly threshold | £2,448 | £2,083 |
| Weekly threshold | £565 | £480 |
| You repay | 9% of income over the threshold | 9% of income over the threshold |
| Interest (as GOV.UK lists it now) | Variable: 4.1% up to £29,385, rising to 6% from £52,885 | 4.1% |
| Written off | 30 years after the April you were first due to repay | 40 years after the April you were first due to repay |
GOV.UK notes that the threshold amounts change on 6 April every year. "Income" here means what you earn, including bonuses and overtime, before tax and other deductions.
How much you repay
The rule is the same for both plans: 9% of your income above the threshold. GOV.UK stresses that the amount you owe has no impact on how much you repay each year — only your income does. Here is the yearly repayment on a steady salary for 2026/27:
| Salary | Plan 2 a year | Plan 5 a year | Difference |
|---|---|---|---|
| £24,000 | £0 | £0 | £0 |
| £27,000 | £0 | £180 | £180 |
| £30,000 | £55.35 | £450 | £394.65 |
| £35,000 | £505.35 | £900 | £394.65 |
| £40,000 | £955.35 | £1,350 | £394.65 |
| £50,000 | £1,855.35 | £2,250 | £394.65 |
| £60,000 | £2,755.35 | £3,150 | £394.65 |
Once you earn above both thresholds the gap is fixed: 9% of the £4,385 difference between them, which is £394.65 a year. Below £29,385, someone on Plan 2 repays nothing while someone on Plan 5 repays 9% of anything above £25,000.
Worked example: £3,000 a month
Payroll works it out each pay period using the monthly threshold, and GOV.UK's examples round down to the whole pound:
- Plan 2: £3,000 − £2,448 = £552. 9% of £552 = £49.68, so £49 a month.
- Plan 5: £3,000 − £2,083 = £917. 9% of £917 = £82.53, so £82 a month.
Because it is worked out per pay period, a bonus or overtime month can trigger a repayment even if your yearly income ends up below the threshold. GOV.UK says you can ask for a refund after the tax year if your annual income was less than the yearly threshold for your plan.
Interest
GOV.UK says you are "currently charged" 4.1% on Plan 5 (and on Plans 1 and 4), and 6% on a Postgraduate Loan. Interest is added even if you are not working or your income is below the threshold.
Plan 2 uses a variable rate. While you are studying it is usually RPI plus 3%, currently capped at 6%. After you finish or leave your course, it depends on your income:
| Annual income (Plan 2) | Interest rate |
|---|---|
| £29,385 or less | 4.1% |
| £29,386 to £52,884 | 4.1%, plus up to 1.9% |
| £52,885 or more | 6% |
These are the rates GOV.UK shows today; they change over time, and your annual statement (normally in your online account by the end of August) shows how interest has been applied.
When the loan is written off
Neither plan has to be repaid in full if your income never gets there. GOV.UK says:
- Plan 2 loans are written off 30 years after the April you were first due to repay.
- Plan 5 loans are written off 40 years after the April you were first due to repay.
The earliest you start repaying is the April after you leave your course. So for someone who leaves a course in summer 2027, April 2028 is the earliest repayment date, and the Plan 5 write-off would come 40 years after the April they were first due to repay. The Student Loans Company also cancels a loan if the borrower dies, and may cancel it if you can no longer work because of illness or disability and claim certain disability benefits.
On extra repayments, GOV.UK says there is no penalty, you cannot get them refunded, and "you might not benefit from making extra repayments because your loan will be written off at the end of the loan term". It suggests checking when your loan will be written off first, and speaking to a financial adviser if you are unsure.
Other rules worth knowing
- Two jobs: repayments are only taken from a job where your pay is over the threshold, not your combined pay. If you are also self-employed or file a tax return, HMRC uses your combined income for the year instead.
- Plan 2 plus a Postgraduate Loan: you repay 6% over £21,000 and 9% over the Plan 2 threshold at the same time. GOV.UK's example: £2,500 a month gives £45 + £4.68, or £49 a month.
- Credit files: student loans do not appear on credit reports, though lenders may consider them in affordability checks for things like a mortgage.
- Moving abroad: you must tell SLC if you leave the UK for more than 3 months, or you could build up arrears.
Frequently asked questions
What is the Plan 5 student loan threshold for 2026/27?
£25,000 a year, £2,083 a month or £480 a week. You repay 9% of your income above it. The Plan 2 threshold is £29,385 a year, £2,448 a month or £565 a week.
Who is on Plan 5 instead of Plan 2?
Students who applied to Student Finance England and started an undergraduate course, a PGCE, an Advanced Learner Loan or Lifelong Learning Entitlement finance on or after 1 August 2023. Those who started between 1 September 2012 and 31 July 2023 are on Plan 2, as are Welsh students who started on or after 1 September 2012.
How much more does Plan 5 cost each year than Plan 2?
For anyone earning over both thresholds, Plan 5 takes £394.65 a year more in 2026/27: 9% of the £4,385 gap between £25,000 and £29,385. On £30,000, for example, Plan 2 repayments are £55.35 a year and Plan 5 repayments are £450.
When are Plan 2 and Plan 5 loans written off?
Plan 2 loans are written off 30 years after the April you were first due to repay; Plan 5 loans 40 years after. You are first due to repay in the April after you leave your course at the earliest.
Does the size of my student loan change my monthly repayment?
No. GOV.UK says the amount you owe, including interest, has no impact on how much you repay each year. Repayments depend only on your income above the threshold for your plan.
Sources
- GOV.UK — Repaying your student loan (all sections) — read 18 October 2026
- GOV.UK — Rates and thresholds for employers 2026 to 2027 — read 18 October 2026
Yearly repayments were calculated with the student loan function in our take-home pay calculator (9% of a steady salary above the 2026/27 annual threshold). Monthly figures use GOV.UK's per-month method, rounded down to the pound. Interest rates are quoted as GOV.UK showed them on 18 October 2026.
Prepared and reviewed by the Calcistry editorial team · Reviewed · Editorial policy
General information, not financial or tax advice. Rules and rates can change; check GOV.UK or the relevant tax authority for your own circumstances.
See your repayment in your pay
Add Plan 2, Plan 5 or a Postgraduate Loan to the take-home pay calculator and see the deduction alongside tax and National Insurance.
Open the take-home pay calculator →