Independent briefing · 5 minute read
Plan 2 vs Plan 4 student loans
Where you were funded matters more than where you live. Plan 2 and Plan 4 side by side.
Editorial record
- Last reviewed
- 7 August 2026
- Purpose
- General information, independently produced
01
What is the difference between Plan 2 and Plan 4 student loans?
Where you were funded matters more than where you live or work. A graduate funded by SAAS in Scotland and one funded in England can hold similar balances and earn the same salary while repaying very different amounts, because the thresholds and interest rules differ substantially.
02
The rules side by side
| Plan 2 | Plan 4 | |
|---|---|---|
| Repayment threshold | £29,385 a year | £33,795 a year |
| Repayment rate above the threshold | 9% | 9% |
| Interest | RPI up to RPI plus 3%, rising with income, currently capped at 6% | The lower of RPI or Bank Rate plus 1% |
| Written off after | 30 years | 30 years |
| Who it applies to | Started uni September 2012 onwards (England: up to July 2023) | Funded by SAAS (Scotland) |
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 £40,000 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 2 monthly | Plan 2 outcome | Plan 4 monthly | Plan 4 outcome |
|---|---|---|---|---|
| £25,000 | £0 | £133,796 written off | £0 | £133,796 written off |
| £30,000 | £5 | £133,711 written off | £0 | £133,796 written off |
| £35,000 | £42 | £132,342 written off | £9 | £127,594 written off |
| £45,000 | £117 | £120,318 written off | £84 | £76,120 written off |
| £60,000 | £230 | £11,305 written off | £197 | Clears in 29 years and 1 month |
Assumptions: a £40,000 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 4 is the gentler system on both counts that matter: a much higher threshold before repayments begin, and interest capped at the lower of RPI or Bank Rate plus one per cent rather than Plan 2 tiered rates.
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 2: English students who started an undergraduate course between September 2012 and July 2023, and Welsh students who started on or after September 2012.
Plan 4: Students funded by SAAS in Scotland, covering undergraduate and postgraduate borrowing.
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.