Student Loan Plan 5 Calculator

Complete Guide to Student Loan Plan 5

Who Is on Plan 5?

Plan 5 applies exclusively to students from England who started an undergraduate degree, HND, HNC or other qualifying higher education course on or after 1 August 2023. If you started your course before that date, you remain on Plan 2 regardless of when you graduate. Welsh students starting from 2023 onwards are on Plan 1 (a different, older plan specific to Wales). Scottish students are on Plan 4. Northern Irish students are on Plan 1. If you deferred your entry, what matters is when your studies actually started, not when you first applied.

Postgraduate loans are handled separately under the Postgraduate Loan plan — they do not become Plan 5. If you have both an undergraduate loan (Plan 5) and a postgraduate loan, they are tracked, calculated, and collected independently by the Student Loans Company (SLC).

The £25,000 Repayment Threshold Explained

You begin repaying your Plan 5 loan in the April following the academic year in which you finish or leave your course, but only if you earn above the repayment threshold. In 2026, this threshold is £25,000 per year (£2,083 per month / £480 per week). Repayments are calculated as 9% of everything you earn above that threshold.

For example, if you earn £32,000 per year, you earn £7,000 above the threshold. Your annual repayment is £7,000 × 9% = £630, or £52.50 per month. The threshold is set to be frozen at £25,000 until 2027, after which the government intends to uprate it annually in line with average earnings growth.

The threshold applies across all UK income sources. HMRC collects your repayments via your PAYE payroll — you will see a deduction on your payslip labelled "Student Loan." If you are self-employed, repayments are made via your annual Self Assessment tax return.

How Plan 5 Interest Works

While you are studying, interest accrues at RPI + 3%. From the April after you leave or complete your course, interest drops to RPI only. RPI (Retail Price Index) is an inflation measure typically higher than CPI. The rate is set each September using the RPI figure from the previous March.

There is an important interest rate cap: if RPI exceeds average earnings growth, the interest rate is capped at the average earnings growth rate. This prevents balances from spiralling in a way that would make the debt unpayable relative to income growth. In 2025/26, the Plan 5 interest rate stands at approximately 7.3%.

Unlike a commercial loan, you cannot choose when interest accrues or negotiate the rate. The good news is that interest does not affect your monthly repayment amount — you always pay 9% above the threshold regardless of the outstanding balance. However, interest does determine how quickly or slowly your balance changes over time, affecting whether you repay in full before write-off.

The 40-Year Write-off Rule

Any remaining Plan 5 balance is written off 40 years after the April you first became liable to repay. For a student graduating in summer 2026, the first repayment liability falls in April 2027, meaning write-off occurs in April 2067. This is ten years longer than Plan 2 (which offers a 30-year write-off).

The extended timeline has a significant practical consequence. Under Plan 2, many graduates on middle incomes see their balances written off without fully repaying. Under Plan 5, higher-earning graduates are more likely to clear the debt completely before the 40-year mark, paying substantially more than they borrowed. Lower earners, however, may still benefit from write-off, particularly if their salary growth is modest.

Written-off amounts do not affect your credit score and are not treated as taxable income.

National Insurance and Payroll Deductions

Student loan repayments are collected by HMRC through the PAYE system alongside income tax and National Insurance. They appear as a separate deduction on your payslip. Unlike tax, there is no monthly threshold adjustment — it is always based on your pay in that period annualised.

If you have multiple jobs, each employer deducts student loan repayments only from that employment where your earnings exceed the weekly or monthly equivalent of the threshold. This can mean you under-repay through the year. HMRC reconciles your total annual income via Self Assessment where necessary.

Repayments If You Move Overseas

You remain liable to repay your Plan 5 loan even if you live and work abroad. Before leaving the UK for 3 months or more, you must notify the Student Loans Company. They will calculate overseas repayments based on comparable thresholds for the country you live in (adjusted for cost of living and earnings differences). Overseas repayments are made directly to the SLC, not via PAYE. Failure to notify can result in a default repayment schedule applied automatically.

Should You Make Voluntary Overpayments?

You can make voluntary overpayments to the Student Loans Company at any time without penalty. Whether this makes financial sense depends entirely on your long-term earning trajectory.

Overpaying is beneficial when: You are a higher earner on track to fully repay before write-off, the loan balance is small and clearing it quickly saves meaningful interest, and you have already maximised other tax-efficient savings (pension, ISA).

Overpaying is wasteful when: Projections show a significant balance remains at write-off (common for lower earners), you could earn better returns investing the money elsewhere, or your income may fluctuate due to career breaks or part-time working.

Use our calculator to project your balance at year 40. If a substantial balance remains, voluntary overpayments are unlikely to benefit you. If projections show a small remaining balance, targeted overpayments could clear the debt early and save interest.

Scottish, Welsh and Northern Irish Students

Devolved administrations have their own student finance systems. Scottish students studying at Scottish universities receive tuition funded by the Student Awards Agency Scotland (SAAS) and take out Plan 4 maintenance loans. Welsh students (post-2018 starters) are on a hybrid system with maintenance loan + grant, repaid under Plan 1 rules. Northern Irish students are on Plan 1. None of these are affected by Plan 5 rules. The plan you are on depends on where you ordinarily live (your domicile), not where you study.

Worked Examples: Plan 5 Repayments