Independent briefing · 5 minute read
Plan 1 vs Plan 2 student loans
The 2012 fee reform split a generation. What it means for what each side actually repays.
Editorial record
- Last reviewed
- 7 August 2026
- Purpose
- General information, independently produced
01
What is the difference between Plan 1 and Plan 2 student loans?
The 2012 fee reform split a generation of graduates. Plan 1 borrowers carry smaller balances at a lower threshold with cheaper interest; Plan 2 borrowers carry much larger balances with interest that can run well above inflation. The result is that Plan 1 borrowers often clear their loans while Plan 2 borrowers frequently do not.
02
The rules side by side
| Plan 1 | Plan 2 | |
|---|---|---|
| Repayment threshold | £26,900 a year | £29,385 a year |
| Repayment rate above the threshold | 9% | 9% |
| Interest | The lower of RPI or Bank Rate plus 1% | RPI up to RPI plus 3%, rising with income, currently capped at 6% |
| Written off after | 25 years | 30 years |
| Who it applies to | Started uni before 1 September 2012 (England/Wales), or Student Finance NI | Started uni September 2012 onwards (England: up to July 2023) |
Thresholds and rates are the verified 2026/27 figures used throughout this site. Every one is listed with its official source on the sources page.
03
What each plan costs on a £30,000 balance
These figures are produced by the same engine that powers the calculator, run for both plans at identical salaries and an identical starting balance, so the only thing that differs is the plan itself.
| Salary | Plan 1 monthly | Plan 1 outcome | Plan 2 monthly | Plan 2 outcome |
|---|---|---|---|---|
| £25,000 | £0 | £81,776 written off | £0 | £100,347 written off |
| £30,000 | £23 | £70,031 written off | £5 | £99,481 written off |
| £35,000 | £61 | £51,089 written off | £42 | £91,049 written off |
| £45,000 | £136 | £13,204 written off | £117 | £61,868 written off |
| £60,000 | £248 | Clears in 13 years and 1 month | £230 | Clears in 17 years and 9 months |
Assumptions: a £30,000 starting balance, a salary held constant so that the plan rules are the only variable, and interest held at the verified snapshot. Real salaries rise, which shortens the picture for higher earners. Use the calculator to model your own balance, salary and pay growth.
04
The bottom line
Plan 1 repayments start at a lower salary, which surprises people, but the combination of smaller balances, cheaper interest and a shorter term means Plan 1 borrowers are far more likely to actually clear the debt rather than pay for decades and have it cancelled.
Neither plan is something you choose. Your plan is set by where and when you were funded, so the practical value of knowing the difference is understanding whether your balance is likely to be cleared or cancelled, which is what determines whether paying extra makes any sense at all.
05
Which plan am I on?
Plan 1: England and Wales undergraduate courses starting before September 2012, plus Student Finance Northern Ireland borrowing.
Plan 2: English students who started an undergraduate course between September 2012 and July 2023, and Welsh students who started on or after September 2012.
Your funding body decides your plan, not where you now live or work. Our which plan am I on guide works it out from your funding body and course start year. Your online repayment account with the Student Loans Company states the plan the Student Loans Company has you on, and GOV.UK explains how plans are assigned.
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This is general information, not financial advice. Check GOV.UK for the official rules that apply to your circumstances.