If you started an undergraduate course in England from August 2023, your loan is on Plan 5. If you started between September 2012 and July 2023 (in England or Wales), you are on Plan 2. The two look similar on paper, but they behave very differently over a working life. This guide compares them for 2026/27, using the same engine as our Plan 2 and Plan 5 calculators.
The rules side by side
| Plan 2 | Plan 5 | |
|---|---|---|
| Repayment threshold 2026/27 | £29,385 a year | £25,000 a year |
| Repayment rate | 9% of income above the threshold | 9% of income above the threshold |
| Threshold in future | Frozen at £29,385 until April 2030 | Rises with RPI from April 2027 |
| Interest (September 2026 to August 2027) | RPI to RPI + 3% depending on income, capped at 6% | RPI only: 4.1% |
| Written off | 30 years after you were first due to repay | 40 years after you were first due to repay |
On Plan 2, interest depends on what you earn: 4.1% (RPI) on income up to £29,385, rising on a sliding scale to RPI + 3% at £52,885, with the 6% cap applying this year. Someone on £40,000 is charged about 5.46%; anyone earning about £44,300 or more hits the 6% cap.
What comes out of your pay each month
Repayments depend only on your income, not on how much you borrowed. Plan 5’s lower threshold means you repay more at every salary:
| Salary | Plan 2 a month | Plan 5 a month |
|---|---|---|
| £25,000 | £0 | £0 |
| £30,000 | £4.61 | £37.50 |
| £35,000 | £42.11 | £75.00 |
| £40,000 | £79.61 | £112.50 |
| £50,000 | £154.61 | £187.50 |
| £60,000 | £229.61 | £262.50 |
The gap is a steady £32.89 a month (£394.65 a year) once you earn above the Plan 2 threshold. That is 9% of the £4,385 difference between the two thresholds. Repayments are taken through PAYE alongside tax and NI; the take-home pay calculator includes them.
What you repay over a lifetime
The real difference is the length of the term. Here are projections for a £50,000 balance, starting to repay now, with pay rising 3% a year and RPI at 3% from 2027:
| Starting salary | Plan 2: total repaid | Plan 2: written off | Plan 5: total repaid | Plan 5: written off |
|---|---|---|---|---|
| £28,000 | £4,467 | £191,013 | £20,358 | £130,640 |
| £35,000 | £34,266 | £168,232 | £67,861 | £50,831 |
| £50,000 | £98,493 | £59,176 | £73,611 | £0 (cleared in year 24) |
Three things stand out:
- Most people on Plan 2 never clear the loan. Even a graduate starting on £50,000 still has a balance written off after 30 years in this projection, having repaid nearly twice what they borrowed.
- Plan 5 takes more from middle earners. At £35,000, a Plan 5 borrower repays roughly double what a Plan 2 borrower would, because the threshold is lower and the payments run for 40 years instead of 30.
- Plan 5 is cheaper for high earners. Lower interest (RPI only) means a Plan 5 borrower on £50,000 clears the loan in 24 years and repays about £25,000 less than on Plan 2.
The written-off figures look alarming, but you never pay them. Once the term ends, whatever is left is cancelled. The balance you see in your online account is, for many people, not a debt you will ever repay.
Should you overpay?
This is where most people go wrong. Overpaying only saves money if you were going to clear the loan anyway. If you are heading for a write-off, every extra pound simply replaces a pound that would have been cancelled.
Here is the effect of overpaying £100 a month on a £50,000 Plan 5 loan:
- Starting salary £35,000: total repaid rises from £67,861 to £80,818. The loan is cleared in year 31, but you have paid nearly £13,000 more. Overpaying costs money.
- Starting salary £50,000: total repaid falls from £73,611 to £65,395, and the loan is cleared in year 17 instead of year 24. Overpaying saves about £8,200.
The calculators show both paths for your own balance and pay. As a rough rule, overpaying makes sense only if you expect your earnings to be high enough to clear the loan well before the write-off date. Otherwise, the money usually does more in a pension (with tax relief) or a stocks and shares ISA, or towards a house deposit.
Common questions
Does a student loan affect my mortgage?
It is not a debt on your credit file, but lenders count the monthly repayment as an outgoing when they work out how much to lend. A Plan 5 borrower on £40,000 has £112.50 a month taken into account. Our mortgage affordability calculator lets you include it.
What if I have a Plan 2 loan and a Postgraduate Loan?
You repay both at once: 9% above the Plan 2 threshold and 6% above £21,000 for the Postgraduate Loan. See the Postgraduate Loan calculator.
What if I move abroad?
You must tell the Student Loans Company. Repayments are then set using the threshold for the country you live in, and you pay them directly instead of through PAYE.
I’m starting university. What will I borrow?
Tuition fee loans plus maintenance loans of up to several thousand pounds a year. The maintenance loan calculator shows your entitlement from household income.
The bottom line
A student loan works more like a 9% graduate tax for 30 or 40 years than a normal debt. Plan 5 takes more from middle earners and less from high earners than Plan 2. Before you overpay, check whether you would ever clear the loan; for most people, you won’t, and the money is better used elsewhere. These are projections based on assumptions about pay and inflation, not a guarantee.