What is the difference between Plan 2 and Plan 5 student loans?

Plan 2 applies to students who started an undergraduate course in England between 2012 and July 2023. The repayment threshold is £27,295/year. Plan 5 applies to students starting from August 2023 onwards. The threshold is lower at £25,000/year, the loan is written off after 40 years (vs 30 for Plan 2), and interest is charged at the RPI rate only (not RPI + 3% like Plan 2 during study).

Student Loan Repayment Calculator UK 2025

Q: How much do I repay on Plan 2 student loan?

On Plan 2, you repay 9% of your income above the threshold, which is £27,295 per year (2025/26) for England and Wales graduates who started university from 2012. If you earn £35,000, you repay 9% of (£35,000 - £27,295) = 9% of £7,705 = £693 per year, or about £57.75 per month.

Q: When is a student loan written off in the UK?

Plan 1 loans are written off 25 years after the April you were first due to repay, or when you turn 65 (whichever is earlier). Plan 2 loans are written off 30 years after you enter repayment. Plan 4 loans are written off 30 years after the April you were first due to repay or when you turn 65. Plan 5 loans are written off 40 years after you enter repayment. Postgraduate loans are written off 30 years after you enter repayment.

Q: Do I have to repay my student loan if I go abroad?

Yes. If you move abroad, you are still required to make student loan repayments. You must notify the Student Loans Company and repay based on equivalent salary thresholds set for the country you are living in. Different thresholds apply for different countries, converted into the local currency equivalent. Failing to repay while abroad can lead to the full balance becoming due immediately.

Q: Does my student loan affect my credit score?

No. UK student loans do not appear on your credit file and do not directly affect your credit score. However, student loan repayments do reduce your take-home pay, which may affect how much a mortgage lender is willing to lend you, as they assess affordability based on your net income after all deductions including student loan repayments.

Q: Should I make voluntary student loan overpayments?

For most people, making voluntary overpayments on a student loan is not recommended. Since Plan 2 and Plan 5 loans are written off after 30–40 years, many graduates — particularly lower to middle earners — will never fully repay their loan. Overpaying simply reduces a balance that might be written off anyway. Higher earners on a clear trajectory to full repayment may benefit from overpaying if the interest rate exceeds what they could earn on savings.

Q: What is the interest rate on UK student loans?

Interest rates vary by plan. Plan 1: RPI (capped). Plan 2: RPI while studying, then RPI to RPI+3% based on income after graduation. Plan 4 (Scotland): RPI. Plan 5: RPI only (no income-linked surcharge). Postgraduate: RPI+3%. Rates are reviewed annually in September. The RPI rate used from September 2024 is based on the RPI figure from the previous March.

Last updated: February 2025 | Author: Mustafa Bilgic (MB)

Student Loan Repayment Calculator

Enter your loan balance, salary and plan type to calculate your repayments and write-off projection.

Student Loan Plan Current Loan Balance (£)

Check your balance at studentfinance.co.uk or the SLC website.

Annual Gross Salary (£) Expected Annual Salary Growth (%)

UK average wage growth has been approximately 3–5% per year in recent years.

Interest Rate (% per year)

Plan 2 current rate: up to RPI+3% (approx 7.3% for higher earners). Plan 5: RPI only (approx 4.3%). Plan 1: 6.25%. Postgraduate: RPI+3%.

2025/26 Repayment Thresholds: Plan 1: £24,990 • Plan 2: £27,295 • Plan 4: £31,395 • Plan 5: £25,000 • Postgraduate: £21,000. All plans charge 9% of income above the threshold, except Postgraduate which is 6%.

Understanding UK Student Loan Plans

The UK student loan system is often misunderstood. Unlike a commercial loan, UK student loans are income-contingent — you only repay when your income exceeds a set threshold, and any outstanding balance is written off after a set number of years. This fundamentally changes the calculation of whether to overpay or how much you will ultimately repay.

There are currently five main repayment plans in England and Scotland, each with different thresholds, interest rates and write-off periods. It is crucial to know which plan you are on, as this significantly affects how much you will repay each month and over your lifetime.

Repayment Plan Quick Reference (2025/26)

Plan	Who	Threshold	Rate	Written Off
Plan 1	Pre-2012 starters (England/Wales); NI students	£24,990/yr	9%	25 years or age 65
Plan 2	2012–July 2023 starters (England/Wales)	£27,295/yr	9%	30 years
Plan 4	Scottish students (post-1998)	£31,395/yr	9%	30 years or age 65
Plan 5	From Aug 2023 starters (England)	£25,000/yr	9%	40 years
Postgraduate	Masters/Doctorate loans	£21,000/yr	6%	30 years

Plan 2 — The Most Common Plan

Plan 2 applies to the largest group of current graduates: anyone who started an undergraduate degree in England or Wales from September 2012 to July 2023. Under Plan 2, you repay 9% of your income above £27,295 per year (£2,274.58 per month). The loan is written off 30 years after you entered repayment — typically the April after you graduated.

Interest on Plan 2 loans is charged at the Retail Price Index (RPI) rate while you are studying and for the first few months after graduation. Once you earn above the threshold, interest rises to RPI plus up to 3%, based on your income. When you earn above £49,130, you pay RPI+3%. Between £27,295 and £49,130, the interest rate scales linearly between RPI and RPI+3%.

Plan 5 — The New System (August 2023 Onwards)

Students starting university in England from August 2023 are on Plan 5, which represents a significant change from Plan 2. The repayment threshold is lower at £25,000 per year, meaning graduates start repaying at a lower salary. However, the write-off period is extended to 40 years (from 30), and the interest rate is capped at RPI only (no income-linked surcharge). For most graduates, Plan 5 means paying more overall than Plan 2 due to the lower threshold and longer repayment period, though those who repay in full benefit from the lower interest rate.

How Repayments Are Collected

If you are employed, student loan repayments are collected automatically through PAYE (Pay As You Earn) by your employer and HMRC, in the same way as income tax and National Insurance. You do not need to set up any direct payments — it happens automatically. The repayment will appear as a deduction on your payslip alongside tax and NI. If you are self-employed, you declare student loan repayments on your Self Assessment tax return.

Frequently Asked Questions

How much do I repay on Plan 2 student loan? +

On Plan 2, you repay 9% of your income above £27,295/year. If you earn £35,000: 9% of (£35,000 - £27,295) = 9% of £7,705 = £693/year = £57.75/month. You only repay when above the threshold — if your salary falls below, repayments pause automatically.

When is a student loan written off in the UK? +

Plan 1: 25 years after first repayment due date, or age 65. Plan 2: 30 years after entering repayment. Plan 4: 30 years or age 65. Plan 5: 40 years after entering repayment. Postgraduate: 30 years. Any outstanding balance at the write-off date is cancelled, and this is not treated as taxable income.

What is the difference between Plan 2 and Plan 5? +

Plan 2 (2012–July 2023 starters): threshold £27,295, write-off after 30 years, interest RPI+0–3%. Plan 5 (August 2023 onwards): threshold £25,000, write-off after 40 years, interest at RPI only. Plan 5 has a lower threshold (you repay sooner) but lower interest rates and a longer write-off period.

Do I have to repay my student loan if I go abroad? +

Yes. You must notify the Student Loans Company and make repayments based on equivalent thresholds for the country you live in. Different countries have different equivalent thresholds. Repayments are self-reported rather than collected via PAYE while abroad.

Does my student loan affect my credit score? +

No. UK student loans do not appear on your credit file. However, mortgage lenders will ask about student loan repayments when assessing affordability, as they reduce your monthly take-home pay. This can reduce the amount lenders offer you.

Should I make voluntary student loan overpayments? +

For most people, no. If you are unlikely to fully repay within the write-off period (30–40 years), overpaying reduces a balance that will be cancelled anyway. Higher earners who project full repayment within the write-off period may benefit from overpaying if the loan interest rate exceeds savings/investment returns available elsewhere.

What is the interest rate on UK student loans? +

Rates vary: Plan 1: RPI (approx 6.25% 2024/25), Plan 2: RPI to RPI+3% based on income, Plan 4: RPI, Plan 5: RPI only, Postgraduate: RPI+3%. Rates change each September based on the previous March RPI figure.

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Mustafa Bilgic (MB)

Financial content writer and calculator specialist at UK Calculator. All tools use official HMRC and government data. Learn more about our team.