UK Student Loan Repayment Plans Explained: Plan 1, 2, 4 and 5

The UK student loan system is not one loan with one set of rules. Depending on when and where you studied, you could be on Plan 1, Plan 2, Plan 4 or Plan 5, each with different repayment thresholds, interest rates and write-off dates. Postgraduate loans sit outside these plans entirely. If you have ever stared at your payslip wondering why the deduction changed after a pay rise, or whether your loan is even worth worrying about, understanding your plan is the starting point.

This guide explains each UK student loan repayment plan for 2025/26, who falls under which plan, and how repayments are calculated from your salary. Use our UK student loan calculator to see your estimated monthly and annual repayments based on your plan, salary and outstanding balance.

How student loan repayments work in general

All undergraduate plans use the same repayment mechanism: you pay 9% of your earnings above the plan threshold through PAYE, alongside income tax and National Insurance. Repayments are not based on the outstanding balance. A graduate earning £35,000 on Plan 2 pays the same percentage of income above the threshold as someone who borrowed £20,000 or £60,000. The balance matters mainly for interest accrual and whether you are likely to clear the debt before the write-off date.

If your income drops below the threshold, repayments stop automatically. There is no penalty for not paying when earnings are low, and the system is designed so that lower earners contribute less or nothing at all. This income-contingent model is why many graduates treat student loans as a graduate tax rather than conventional debt.

Plan 1: pre-2012 English and Welsh students

Plan 1 covers students who started an undergraduate course before 1 September 2012 in England or Wales, and Scottish and Northern Irish students on older plans. The 2025/26 threshold is £26,065. Interest is the lower of the Retail Prices Index (RPI) or the Bank of England base rate plus 1%. For 2025/26, Plan 1 interest is typically around 4% to 5%, lower than Plan 2.

A Plan 1 graduate earning £32,000 repays 9% on £5,935 (the amount above the threshold), which is £534 per year or roughly £44.50 per month. Plan 1 loans are written off 25 years after the April following graduation, or when the borrower reaches age 65 if that comes first. Because the interest rate is lower and the write-off period shorter, a higher proportion of Plan 1 borrowers fully repay their loans compared to Plan 2 graduates.

Plan 2: 2012 to 2023 English and Welsh students

Plan 2 is the plan most graduates under 35 are on. It covers English and Welsh students who started university between 1 September 2012 and 31 July 2023. The threshold for 2025/26 is £27,295. Interest is more complex: while studying, it accrues at RPI plus 3%. After graduation, the rate varies with income from RPI only (when earning below the threshold) up to RPI plus 3% (when earning above £49,130).

A Plan 2 graduate earning £35,000 repays 9% on £7,705, which is £693 per year or about £58 per month. A graduate earning £50,000 repays 9% on £22,705, which is £2,043 per year or roughly £170 per month. The interest accruing on large Plan 2 balances means many mid-to-high earners will not clear the debt before the 30-year write-off date. The Institute for Fiscal Studies estimates that roughly 60% of Plan 2 graduates will have some or all of their loan written off.

Model your own repayment profile with our UK student loan calculator, which accounts for your plan type, salary and expected salary growth.

Plan 4: Scottish students

Plan 4 applies to Scottish students who took out a loan from the Student Awards Agency Scotland (SAAS). The 2025/26 threshold is £32,745, the highest of any undergraduate plan, which means Scottish graduates start repaying later than their English counterparts. The repayment rate is still 9% above the threshold. Interest is fixed at RPI, currently simpler than the Plan 2 sliding scale.

A Scottish graduate earning £38,000 on Plan 4 repays 9% on £5,255, which is £473 per year or about £39 per month. The higher threshold reflects the lower tuition fees in Scotland (£1,820 per year for eligible Scottish students at Scottish universities) and the policy choice to place less repayment burden on lower-to-middle earners. Plan 4 loans are written off 30 years after the April following graduation, or at age 65.

Plan 5: students from September 2023 onwards

Plan 5 was introduced for English students starting university from 1 August 2023. It was designed to reduce the total cost for taxpayers by lowering interest rates and extending the repayment period. The threshold is £25,000, lower than Plan 2, so repayments start sooner. Interest is fixed at RPI with no income-based uplift, which prevents balances from ballooning in the way Plan 2 balances often do.

The trade-off is a 40-year write-off period instead of 30 years. A Plan 5 graduate earning £30,000 repays 9% on £5,000, which is £450 per year or £37.50 per month. Lower interest means the balance grows more slowly, but the longer write-off window means more graduates will repay for longer. The government projects that around 55% of Plan 5 borrowers will fully repay, compared to roughly 20% on Plan 2.

Plan comparison at £35,000 salary

• Plan 1: £534 per year (£44.50 per month)
• Plan 2: £693 per year (£58 per month)
• Plan 4: £202 per year (£17 per month)
• Plan 5: £900 per year (£75 per month)
• Plan 1 write-off: 25 years after graduation
• Plan 5 write-off: 40 years after graduation

Postgraduate loans

Postgraduate Master's and Doctoral loans are separate from undergraduate plans. They have a £21,000 repayment threshold and a 6% deduction rate (not 9%). If you have both an undergraduate Plan 2 loan and a postgraduate loan, both deductions appear on your payslip simultaneously. A graduate earning £40,000 with both loans pays 9% on £12,705 for Plan 2 (£1,143 per year) plus 6% on £19,000 for the postgraduate loan (£1,140 per year), totalling £2,283 per year or about £190 per month in student loan deductions alone.

How to check which plan you are on

Log into your account at gov.uk/repaying-your-student-loan or check the Student Loans Company (SLC) portal. Your plan type is listed on your annual statement and on your payslip, where the deduction code shows PL1, PL2, PL4 or PL5. If you started before 2012, you are on Plan 1. If you started between 2012 and July 2023 in England, you are on Plan 2. Scottish SAAS loans are Plan 4. If you started from August 2023 in England, you are on Plan 5.

Understanding your plan affects every financial decision from salary negotiation to overpayment choices. Check your take-home pay after loan deductions using our UK salary calculator, which lets you factor in student loan repayments alongside tax and NI. For details on how deductions appear on your payslip each month, see our guide on student loan PAYE deductions.

The plan you are on was set when you started university and cannot be changed retrospectively. What you can control is how you factor repayments into your budget, whether voluntary overpayments make sense for your plan and balance, and how student loan costs interact with other financial goals like saving for a deposit. Our UK student loan calculator is the fastest way to translate your plan and salary into real numbers.

How interest accrues on each plan

Interest is applied daily to your outstanding balance on all plans. On Plan 1, the rate is typically 4% to 5% based on RPI. Plan 2 graduates see rates between RPI (around 4.3% when earning below the threshold) and RPI plus 3% (around 7.3% when earning above £49,130). Plan 4 charges RPI only. Plan 5 also charges RPI only, which was a deliberate change to stop balances growing faster than repayments for middle earners.

Interest accrual does not change your monthly deduction, which is always 9% of income above the threshold. But it does affect whether you will ever clear the balance. A Plan 2 graduate earning £35,000 might repay £693 per year while accruing £2,500 to £3,000 in annual interest, meaning the balance grows despite regular payments. This is normal under the Plan 2 design and is why the write-off date matters more than the headline balance figure.

If you are deciding whether to make voluntary overpayments, compare the interest rate on your plan against what you could earn by saving or investing the same money. Plan 5 borrowers paying RPI-only interest may benefit more from overpayments than Plan 2 borrowers on higher income-based rates, but only if their projected earnings suggest they will clear the loan before write-off. Use the calculator to run both scenarios before sending money to the SLC.