Plan 2 vs Plan 5 Student Loans: What's the Difference?

Plan 2 and Plan 5 are the two main undergraduate loan types in England. Plan 5 has a lower repayment threshold of £25,000 but charges cheaper RPI-only interest and runs for 40 years. Plan 2 has a higher threshold but pricier interest.

Last reviewed: 30 May 2026 · 2 min read

Key Facts

Plan 5 threshold is £25,000; Plan 2 is higher at £27,295+
Plan 5 interest is RPI only; Plan 2 adds up to 3% on top
Plan 5 is written off after 40 years; Plan 2 after 30 years

The key differences

Plan 2 covers students who started between 2012 and 2023; Plan 5 covers those starting from August 2023. Plan 5 has a lower threshold, meaning repayments start at a lower salary, but its interest is RPI only with no premium, whereas Plan 2 can add up to 3% on top of inflation.

The trade-off is the term: Plan 5 runs for 40 years before write-off versus 30 for Plan 2, so lower earners on Plan 5 may make repayments for longer.

Which is better for you?

You don't get to choose — your plan depends entirely on when you started your course. But understanding it helps you plan. Plan 5's lower threshold means you start repaying sooner, while its cheaper interest helps higher earners who'll actually clear the balance.

For most graduates the practical monthly cost is similar, because both take 9% of income above the threshold. The differences mainly affect long-term and higher earners.

FAQ

Frequently Asked Questions

Can I be on both Plan 2 and Plan 5? +

Not for undergraduate study — your plan depends on when you started. But you can hold a Plan 2 or Plan 5 undergraduate loan alongside a postgraduate (Plan 3) loan at the same time, in which case you'd make two separate repayments from your salary.

Which plan has cheaper interest? +

Plan 5 generally does, because it charges RPI only with no added percentage. Plan 2 adds a real interest rate of up to 3% on top of RPI, though the government has capped Plan 2 interest at 6% for 2026/27. For most borrowers, though, interest matters less than salary.

Does it matter which plan I'm on if I'm a low earner? +

Not hugely. On both plans you repay 9% of income above the threshold and nothing if you earn below it. The main difference for low earners is that Plan 5's threshold is lower, so repayments may start at a slightly lower salary, and it runs for 40 years rather than 30.

Topics covered

student loans plan 2 plan 5

This article is for informational purposes only and does not constitute financial advice. Always do your own research or speak to a qualified financial adviser before making financial decisions.