Independent briefing · 5 minute read
Plan 2 vs Plan 5 student loans
Two English graduates, same balance, same salary, very different outcomes. What actually separates Plan 2 and Plan 5.
Editorial record
- Last reviewed
- 27 July 2026
- Purpose
- General information, independently produced
01
Why this comparison matters
This is the sharpest divide in English student finance. Two graduates can hold almost identical balances, earn identical salaries, and repay wildly different amounts, purely because one started university before August 2023 and the other after. Plan 5 has a lower threshold, so repayments start earlier and on more of your income, but Plan 2 charges interest above inflation while Plan 5 does not.
02
The rules side by side
| Plan 2 | Plan 5 | |
|---|---|---|
| Repayment threshold | £29,385 a year | £25,000 a year |
| Repayment rate above the threshold | 9% | 9% |
| Interest | RPI up to RPI plus 3%, rising with income | RPI only, with no premium above inflation |
| Written off after | 30 years | 40 years |
| Who it applies to | Started uni September 2012 onwards | Started uni September 2023 onwards |
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 £45,000 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 5 monthly | Plan 5 outcome |
|---|---|---|---|---|
| £25,000 | £0 | £116,442 written off | £0 | £160,287 written off |
| £30,000 | £5 | £116,403 written off | £38 | £124,260 written off |
| £35,000 | £42 | £115,636 written off | £75 | £88,233 written off |
| £45,000 | £117 | £110,884 written off | £150 | £16,178 written off |
| £60,000 | £230 | £47,959 written off | £263 | Clears in 19 years and 2 months |
Assumptions: a £45,000 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 5 usually costs more in total for middle earners, because the lower threshold plus a forty-year term means far more of a working life spent repaying. Plan 2 looks harsher on paper because of its interest rate, but its higher threshold and shorter term mean many borrowers repay less before the balance is 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 2: English and Welsh students who started an undergraduate course between September 2012 and July 2023.
Plan 5: English students who started an undergraduate course from August 2023 onwards.
Your funding body decides your plan, not where you now live or work. If you are not sure, your online repayment account with the Student Loans Company states it, 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.