Student Loan Plan 2 Calculator UK
Calculate your monthly Plan 2 repayments, total interest charged, and whether you’ll clear the debt before the 30-year write-off.
Last updated: February 2026 — Author: Mustafa Bilgic (MB)
Plan 2 Student Loan Repayment Calculator 2025/26
For graduates who started university in England or Wales after September 2012
Understanding Plan 2: England & Wales Post-2012 Graduates
Plan 2 covers anyone who started a full-time undergraduate course in England or Wales on or after 1 September 2012. This encompasses the majority of current graduates, as it has been the standard plan for over a decade. Understanding how Plan 2 works is essential for managing your finances after university.
How Plan 2 Repayments Work
You only begin repaying when your annual income exceeds the repayment threshold of £27,295 per year (2025/26). Below this amount, no repayments are taken regardless of your loan balance. This threshold is typically reviewed each April and tends to rise with average earnings over time.
Repayments are collected automatically through the PAYE system in the same way as income tax and National Insurance. You never need to make manual payments if you are employed. Self-employed graduates repay through the Self Assessment tax return process.
| Plan | Threshold 2025/26 | Rate | Write-off | Who it Applies To |
|---|---|---|---|---|
| Plan 1 | £24,990 | 9% | 25 years / age 65 | Pre-Sept 2012 England/Wales, NI |
| Plan 2 | £27,295 | 9% | 30 years | Post-Sept 2012 England/Wales |
| Plan 4 | £31,395 | 9% | 30 years | Scotland (post-1998) |
| Plan 5 | £25,000 | 9% | 40 years | Post-Aug 2023 England/Wales |
Plan 2 Interest Rates Explained
The interest rate on your Plan 2 loan is one of the most misunderstood aspects of student finance. Unlike a conventional bank loan with a fixed rate, Plan 2 interest is tied to the Retail Price Index (RPI) and scales with your income. Here is how it works in practice.
It is important to understand that the interest rate does not affect your monthly repayment amount — that is always fixed at 9% of income above the threshold. Instead, higher interest causes your loan balance to grow faster, making it less likely you will pay it off before the 30-year write-off date. For most graduates, a higher interest rate is actually beneficial because it means a larger balance is written off.
Key insight: If you are projected to have your loan written off before full repayment (the majority of graduates), a high interest rate does not cost you extra money. The write-off cancels everything. Only graduates who are certain they will repay in full should worry about the interest rate.
The “Loan Trap” Reality: Will You Actually Pay It Off?
The phrase “student loan trap” is often used in headlines to alarm graduates, but the reality is more nuanced. According to the Institute for Fiscal Studies, around 70-75% of current Plan 2 graduates are projected to never fully repay their loan before the 30-year write-off date. This means the majority will have some or all of their remaining balance cancelled.
This happens because the combination of the repayment threshold, relatively low repayment rate (9%), and the 30-year time limit means that graduates on average or below-average salaries will always have their loan growing faster than they can repay it. Even graduates on moderately high salaries of £40,000–£50,000 may not clear their debt within 30 years if they took the maximum tuition fee and maintenance loans.
Worked Examples
Example 1: £35,000 salary, £45,000 balance
- Income above threshold: £35,000 − £27,295 = £7,705
- Annual repayment: £7,705 × 9% = £693.45
- Monthly repayment: £57.79/month
- With 3% salary growth and RPI 3.5% interest, balance likely written off after 30 years
- Estimated total repaid over 30 years: ~£27,000–£35,000
Example 2: £55,000 salary, £40,000 balance
- Income above threshold: £55,000 − £27,295 = £27,705
- Annual repayment: £27,705 × 9% = £2,493.45
- Monthly repayment: £207.79/month
- Interest rate: RPI + 3% (maximum rate applies above £49,130)
- Likely to repay fully in approximately 18–22 years
Should You Make Voluntary Overpayments? The MoneySavingExpert View
Financial journalist Martin Lewis of MoneySavingExpert has consistently argued that for most Plan 2 graduates, making voluntary overpayments is a financial mistake. Here is the reasoning in plain English.
Voluntary overpayments on your student loan are non-refundable. If you overpay and then your income drops, have a career break, or your loan would have been written off anyway, you cannot get that money back. The only circumstance where overpayments make clear financial sense is when you are absolutely certain you will repay the full balance before the 30-year write-off — which typically requires a sustained income well above £49,130 throughout your career.
Reasons NOT to overpay
- Most loans are written off — overpayments are lost
- Non-refundable even if circumstances change
- Better returns investing the money instead
- Interest does not compound in the traditional sense
- Career breaks, illness can disrupt income projections
When overpaying CAN make sense
- Salary consistently above £49,130
- Small remaining balance near end of term
- Very high earner certain to repay within 30 years
- Psychological benefit of clearing the debt
- Interest rate significantly above investment returns
Plan 2 vs Graduate Tax: The Policy Debate
There is a longstanding debate among economists and politicians about whether the Plan 2 student loan system is more accurately described as a graduate tax. The argument centres on several characteristics that Plan 2 loans share with taxation rather than conventional debt.
Like income tax, Plan 2 repayments are income-contingent — they rise and fall with your earnings and stop entirely if your income drops below the threshold. Like a tax, they are collected by HMRC through the PAYE system. And like a tax, the majority of graduates will never repay the full amount, with the government effectively writing off the difference.
The key difference from a true tax is that high earners who do repay the full amount pay a defined and finite amount. A true graduate tax would continue indefinitely. Martin Lewis argues that for budgeting purposes, graduates should think of Plan 2 as a “graduate contribution” rather than a personal debt — it simply reduces your take-home pay by 9% of anything above the threshold and disappears after 30 years regardless.
Overseas Repayment
If you move abroad, you are still required to repay your Plan 2 loan. You must notify the Student Loans Company within 3 months of moving overseas and then report your income annually. The SLC publishes country-specific repayment thresholds that correspond to the local cost of living. Failure to notify the SLC typically results in a fixed overseas repayment schedule that may be higher than what you would actually owe based on your income. The 30-year write-off clock continues to run while you are abroad.
Frequently Asked Questions
What is the 2025/26 Plan 2 repayment threshold?
How is monthly repayment calculated?
When is the Plan 2 loan written off?
Does my Plan 2 loan affect my credit score or mortgage application?
What happens if I take a career break or go part-time?
How do I check my Plan 2 loan balance?
Can I overpay my Plan 2 loan?
What is the Student Loans Company (SLC)?
Official Sources & Further Reading
- GOV.UK — Repaying Your Student Loan
- Student Loans Company — Manage Your Account
- MoneySavingExpert — Student Loan Repayment Guide
- Institute for Fiscal Studies — Graduate Outcomes Research
Disclaimer: This calculator provides estimates based on 2025/26 repayment thresholds published by the Student Loans Company and HMRC. Projections assume constant salary growth and RPI rates which will vary in practice. Results are for guidance only and do not constitute financial advice. Always verify your balance and repayment details via your official SLC account.