Student Loan Repayment: Plan 1, Plan 2 & Plan 5 Compared (2025-26)

Which plan are you on, how much are you repaying, and when does it get written off? Here is everything you need to know about UK student loan repayment in 2025-26.

Which Plan Are You On?

Your student loan plan depends on when you started your course and where you studied — not when you took out the loan. Millions of UK graduates are unaware they are on a different plan from friends or siblings, and the difference in monthly repayments can be significant.

Plan 1 covers students who started before September 2012 in England or Wales, plus all Scottish and Northern Irish undergraduates who started before 2006 (most Scottish/NI graduates are now on Plan 4). The repayment threshold for 2025-26 is £24,990 per year.

Plan 2 covers students who started on or after 1 September 2012 in England or Wales (and before 1 August 2023). The 2025-26 threshold is £28,470 per year. This is the most common plan for graduates currently in employment.

Plan 4 is for Scottish undergraduates. SAAS-funded students repay at 9% above £32,745 per year in 2025-26 — the highest threshold of any plan, meaning many Scottish graduates repay less or nothing at all on median salaries.

Plan 5 is the newest plan, applying to students starting from August 2023 onwards in England. The threshold is £25,000 per year, but the write-off period is 40 years — the longest of any plan. This means most Plan 5 borrowers will repay far more over their lifetime than Plan 2 counterparts.

Postgraduate Loan repayments run separately at 6% above £21,000 per year and can run alongside any of the above plans simultaneously.

Repayment Rate and How It Works

All undergraduate plans charge 9% of income above the relevant threshold. The key word is "above" — if you earn exactly at your threshold, you repay nothing. Repayments are collected automatically through PAYE (just like income tax and NI), so you never have to manually transfer money to the Student Loans Company. If you are self-employed, you declare and pay via Self Assessment.

The rate does not change based on how large your loan balance is. Whether you borrowed £20,000 or £60,000, if you earn £35,000 on Plan 2, you still repay exactly 9% of (£35,000 − £28,470) = £587 per year. The balance only matters for the interest calculation.

Worked Example: £35,000 Salary Across All Plans

To make the comparison concrete, here is what a graduate earning £35,000 per year repays under each plan in 2025-26:

Plan Threshold 2025-26 Annual Repayment Monthly Repayment Write-Off
Plan 1 £24,990 9% × £10,010 = £901 £75 Age 65
Plan 2 £28,470 9% × £6,530 = £587 £49 30 years
Plan 4 (Scotland) £32,745 9% × £2,255 = £203 £17 Age 65
Plan 5 £25,000 9% × £10,000 = £900 £75 40 years
Postgrad (alongside) £21,000 6% × £14,000 = £840 £70 30 years

The difference between Plan 1 and Plan 2 for a £35,000 earner is just £26/month. But Plan 4 (Scotland) holders repay only £17/month — less than a quarter of the Plan 1 amount — because their threshold is nearly £8,000 higher.

Interest Rates 2025-26

Plan 1 interest is set at the lower of the Bank of England base rate plus 1%, or the Retail Price Index (RPI). For 2025-26, this is currently around 4.3%. Plan 2 interest runs at RPI plus up to 3% while studying, and between RPI and RPI+3% during repayment depending on income (lower earners pay RPI only). Plan 5 also uses RPI during repayment. Plan 4 uses RPI plus 1% as a cap, similar to Plan 1.

For many Plan 2 borrowers on average salaries, their annual repayment does not cover the interest added each year — meaning the balance grows. This is intentional design: the Government expects many borrowers to never repay their full balance, with the remainder written off at 30 years. Treating a student loan like a consumer debt and obsessing over the balance is often unhelpful; it functions more like a graduate income tax.

Write-Off: The Critical Difference Between Plans

Plan 2 is written off 30 years after the April following your graduation — typically in your early-to-mid fifties. Plan 5 extends this to 40 years, meaning many Plan 5 borrowers will still be repaying into their sixties. The average Plan 2 borrower is projected to repay approximately £27,000 over their working life before write-off; Plan 5 borrowers are projected to repay significantly more.

Plan 1 write-off is linked to age 65 rather than a fixed post-graduation period. For most current Plan 1 borrowers who graduated before 2012, write-off is now within 10–20 years regardless, since they are typically in their thirties or forties.

Should You Make Voluntary Overpayments?

For Plan 2 borrowers on median salaries, voluntary overpayments are generally a poor financial decision. If you are unlikely to repay the full balance within 30 years (which applies to most borrowers), every pound you pay voluntarily is a pound you would never have had to repay anyway — the remainder would have been written off. Run the numbers using our student loan repayment simulator before making any extra payments.

Overpayments make sense only if your projected salary is high enough that you would repay the full balance before write-off. For high earners (typically above £55,000–£60,000 on Plan 2), clearing the debt faster can save on interest. For most people, it does not.

Related Calculators

Frequently Asked Questions

What is the repayment threshold for Student Loan Plan 2 in 2025-26?

The Plan 2 repayment threshold for 2025-26 is £28,470 per year (£2,373/month). You repay 9% of everything you earn above this threshold. If you earn £35,000, your annual repayment is £587 per year, or £49 per month.

When is a Student Loan written off?

It depends on your plan. Plan 1 loans are written off at age 65. Plan 2 loans are written off 30 years after you first became eligible to repay. Plan 5 loans — for students starting from August 2023 — are written off after 40 years. Scottish Plan 4 loans are written off at age 65.

Can I have more than one student loan plan at the same time?

Yes. A Postgraduate Loan can run alongside Plan 1, Plan 2 or Plan 4. The Postgraduate Loan repayment threshold is £21,000, and you repay 6% of earnings above that — on top of the 9% for your undergraduate plan. Both deductions appear separately on your payslip.