Independent briefing · 8 minute read

Plan 5 student loans explained

England’s current plan: the lowest threshold, RPI-only interest and a 40-year term, with worked figures from the verified rules.

Editorial record

Last reviewed: 7 August 2026
Purpose: General information, independently produced

Who is on Plan 5?

You are on Plan 5 if Student Finance England funded your undergraduate course, PGCE or Advanced Learner Loan and it started on or after 1 August 2023. It is an England-only plan: Wales kept Plan 2 for its new students, Scotland uses Plan 4 and Northern Ireland uses Plan 1. The earliest anyone on Plan 5 was due to start repaying was April 2026, so the first full repayment year is only now under way.

Started in England between September 2012 and July 2023? You are on Plan 2. Funded by SAAS in Scotland? See Plan 4. A master's or doctoral loan is the separate Postgraduate Loan, repaid alongside Plan 5. Not sure which applies? Work through which plan am I on.

Sources: Repaying your student loan: Which repayment plan you’re on · Repaying your student loan: When you start repaying.

Plan 5 repayment threshold for 2026/27

For the 2026/27 tax year the Plan 5 threshold is £25,000 a year (£2,083.33 a month on the official monthly payroll figure), the lowest threshold of any current undergraduate plan. You repay 9% of income above it, taken through PAYE next to tax and National Insurance, or through Self Assessment.

Worked example: on £30,000 you repay 9% of £5,000 (the income above £25,000). That is about £450 a year, or £37.50 a month. A Plan 2 borrower on the same salary pays about £4.61 a month, because their threshold is £29,385.

The monthly threshold matters on its own. Employers test each payslip against £2,083.33, so a bonus or overtime month can trigger a deduction even if your annual income stays under £25,000, GOV.UK confirms you can ask for a refund after the tax year ends in that case. In months you earn less, deductions stop automatically.

These figures come from the calculator's verified repayment rules for 2026/27, checked as of 27 August 2026.

Interest is RPI only

Plan 5 charges interest at RPI only, before, during and after study, there is no income-based addition at any salary. On the verified snapshot the rate is 3.2%. From 1 September 2026 the registry moves it to 4.1%, following the March RPI figure published by the ONS.

This is the structural advantage over Plan 2, where higher earners are currently charged up to 6.2%. A Plan 5 balance grows only with the RPI measure of inflation, so it does not balloon as your salary rises, and the income-based additions and caps that complicate Plan 2 simply do not exist here. The trade-off is on the other side of the ledger: a lower threshold and a longer term. How the September rate cycle works across every plan is covered in how student loan interest works.

As on every plan, interest accrues even in months you pay nothing, but it never changes your monthly deduction, which depends only on income.

The 40-year write-off

Whatever remains of a Plan 5 loan is cancelled 40 years after the April you were first due to repay, ten years longer than Plan 2. Since no Plan 5 borrower was due to repay before April 2026, the first Plan 5 write-offs cannot arrive before 2066 (a derived figure: April 2026 plus 40 years, not an official date).

A 40-year term means most Plan 5 borrowers will repay for most of their working life unless they clear the balance early, and it shifts the overpayment question: a longer horizon gives extra payments more time to matter, but also more time for circumstances to change. The clock rules and early cancellation cases are in when is a student loan written off.

Source: Repaying your student loan: When your student loan gets written off or cancelled.

Plan 5 vs Plan 2 at a glance

Plan 5 and Plan 2 share the same 9% repayment rate above the threshold. The differences are where that threshold sits, how interest is calculated, and when the balance is written off.

Plan 5

Threshold: £25,000
Interest: RPI only (4.1% from 1 September 2026)
Write-off: 40 years
Repayment rate: 9% above threshold

Plan 2

Threshold: £29,385
Interest: RPI to RPI+3% (up to 6.2% now; capped at 6% for 2026/27)
Write-off: 30 years
Repayment rate: 9% above threshold

Which side of the trade wins depends on salary path and balance, modelled at five salaries in Plan 2 vs Plan 5.

Plan 5 questions, answered

When did Plan 5 repayments actually start?

April 2026 at the earliest, the plan launched with a repayment floor, so no Plan 5 borrower was due to repay before then. The ordinary rule applies from now on: repayments are due from the April after you finish or leave your course, in months your income is over the threshold.

Do I repay anything if I earn under £25,000?

Not on an annual basis, but PAYE tests each payslip against the monthly threshold of £2,083.33, so a bonus or overtime month can trigger a deduction. If your total for the year stays under £25,000, you can ask for that money back after the tax year ends.

Does interest change what leaves my payslip?

No. The deduction is always 9% of income above the threshold regardless of the rate. Interest determines how long deductions continue and whether you clear the balance before the 40-year write-off.

Does a Plan 5 loan affect my credit score?

No. GOV.UK states that student loans do not appear on credit reports and do not affect your credit score, though lenders may consider the repayments during affordability checks for other borrowing, such as a mortgage.

I also have a Postgraduate Loan. What do I pay?

Both at once, calculated separately: 6% of income above £21,000 for the Postgraduate Loan, plus 9% above £25,000 for Plan 5, in the same payslip. The calculator models the two together if you tick the Postgraduate Loan option.

Calculator limitations

Projections hold the verified snapshot (checked 27 August 2026) constant: the threshold and RPI do not move year to year unless you change the advanced assumptions yourself. Over a 40-year horizon that is a deliberately conservative simplification, real thresholds and rates will change many times.

Outcomes are illustrative estimates, not personalised financial advice.

Official sources

Figures on this page follow the calculator's verified rules, last checked 27 August 2026. Useful official pages:

Plan 5 trades a lower interest rate for a lower threshold and a longer repayment window; whether that helps or hurts depends on your salary path and balance. Open the student loan calculator with Plan 5 selected, then replace the example values with your own.

Related briefings

This is general information, not financial advice. Check GOV.UK for the official rules that apply to your circumstances.