If you studied in England, the student loan system you are on depends largely on when you started university. Most recent graduates are on Plan 2, while newer students are on Plan 5. The difference matters: Plan 5 generally means starting repayments at a lower salary and potentially repaying for longer.
Figures below are for the 2026/27 tax year.
| Feature | Plan 2 | Plan 5 |
|---|---|---|
| Who is it mainly for? | Students who started undergraduate courses between 1 September 2012 and 31 July 2023 | Students who started undergraduate courses on or after 1 August 2023 |
| Repayment threshold | £29,385 a year | £25,000 a year |
| Repayment rate | 9% of earnings above £29,385 | 9% of earnings above £25,000 |
| Interest | RPI while earning up to £29,385, rising with income to normally as much as RPI + 3% | Normally RPI only |
| When is remaining debt written off? | 30 years after you become due to repay | 40 years after you become due to repay |
What does that mean for your payslip?
You don't pay 9% of your whole salary. You only pay 9% of the amount above your plan's threshold.
On a £30,000 salary, for example:
Plan 2: £30,000 − £29,385 = £615
9% of £615 = about £55 a year
Plan 5: £30,000 − £25,000 = £5,000
9% of £5,000 = £450 a year
The difference becomes:
| Salary | Approx. Plan 2 repayment | Approx. Plan 5 repayment |
|---|---|---|
| £25,000 | £0/year | £0/year |
| £30,000 | £55/year | £450/year |
| £40,000 | £955/year | £1,350/year |
| £50,000 | £1,855/year | £2,250/year |
Actual PAYE deductions are calculated by pay period, so monthly figures can vary, particularly if your income changes or you receive a bonus.
Is Plan 5 worse?
In some respects, yes. Plan 5 borrowers begin repaying at a lower income and can remain liable for repayments for 40 years rather than 30. That means many graduates are likely to make repayments for a lot longer.
The trade-off is interest. Plan 5 interest is normally limited to RPI, whereas Plan 2 borrowers can be charged up to RPI + 3% depending on their circumstances and income. For 2026/27, the government has also capped Plan 2 interest at a maximum of 6%.
Importantly, your monthly repayment is determined by what you earn, not by how large your outstanding balance is.
For most students, it makes more sense to think of these loan repayments as an income-linked deduction from future earnings rather than something that needs to be cleared immediately after graduating.
