From 6 April 2026, the first tranche of Plan 5 student loan borrowers in England start repaying. Plan 5 covers undergraduate and PGCE courses started on or after 1 August 2023 — the newest of five UK student loan plans. Compared to Plan 2 (the dominant plan for 2012-2023 starters), Plan 5 has a lower repayment threshold of £25,000, a longer 40-year write-off window, and RPI-only interest (with no real-rate add-on).
Plan 5 at a glance
| Feature | Plan 5 |
|---|---|
| Who it covers | Undergraduate/PGCE students in England starting on or after 1 August 2023 |
| Repayment threshold | £25,000/year (£2,083/month, £480/week) |
| Repayment rate | 9% of income above threshold |
| Interest rate | RPI only (3.2% for 1 Sept 2025 to 31 Aug 2026) |
| Write-off period | 40 years after Statutory Repayment Due Date |
| First earliest repayment | 6 April 2026 |
All five UK plans — 2026/27 thresholds
From 6 April 2026 the repayment thresholds are:
| Plan | Who | Threshold 2026/27 | Interest (Sept 25 – Aug 26) |
|---|---|---|---|
| Plan 1 | Pre-Sept 2012 England/Wales, pre-1998 Scotland/NI | £26,900 | 3.2% (RPI or BoE+1%, lower) |
| Plan 2 | Sept 2012 – July 2023 England/Wales | £29,385 (frozen to 2030) | 3.2% – 6.2% (income-varying) |
| Plan 4 | 1998+ Scotland | £33,795 | 3.2% |
| Plan 5 | From 1 Aug 2023 England | £25,000 | 3.2% (RPI only) |
| Postgraduate (Plan 3) | Masters/PhD loans from 2016+ | £21,000 | 6.2% (RPI + 3%) |
Plan 2 freeze — a separate story
The Plan 2 threshold rises to £29,385 in April 2026 and is then frozen at that level until April 2030. The freeze is projected to raise approximately £170 million a year by pulling more graduates into repayment as wages rise but the threshold stays fixed.
Worked repayment examples
Plan 5 graduate on £30,000: £5,000 above threshold × 9% = £450/year (£37.50/month)
Plan 5 graduate on £35,000: £10,000 above threshold × 9% = £900/year (£75/month)
Plan 5 graduate on £50,000: £25,000 above threshold × 9% = £2,250/year (£187.50/month)
Plan 2 graduate on £35,000 (April 2026): £5,615 above threshold × 9% = £505/year
Why Plan 5 is designed this way
Plan 5 was introduced to shift the student finance system towards:
- Lower-earning graduates paying more in total — starting earlier (£25,000 vs £29,385 for Plan 2) and for longer (40 years vs 30 years) means a broader group of graduates make meaningful contributions over their working life.
- Higher earners paying less in total — RPI-only interest (no real rate) means high earners clear the loan in less time than Plan 2 equivalents, reducing overall repayments.
- Lower government subsidy — the Office for Budget Responsibility's Resource Accounting and Budgeting (RAB) charge is projected to be materially lower for Plan 5 than Plan 2.
The Institute for Fiscal Studies and the House of Commons Library have both analysed the distributional effects. The headline is that Plan 5 is more regressive than Plan 2: lower earners contribute more across their lifetime, while higher earners contribute less.
The repayment thresholds — per pay period, not just annual
This is a common source of confusion. Repayments are calculated per pay period, not just on annual income. If you are paid monthly and earn above £2,083 in any single month (your Plan 5 monthly threshold), 9% of the excess is deducted via PAYE — even if your annual income ends up below £25,000.
If your annual income is below the yearly threshold, you can request a refund from the Student Loans Company at the end of the tax year. Many graduates in variable-pay roles (bonuses, commission, freelance) miss this and lose money.
Why you typically should not overpay
Around 60-70% of Plan 2 borrowers are projected not to fully repay before write-off. Plan 5 modelling is still early, but similar patterns are expected for lower and middle earners. Key points:
- Student loans do not appear on your credit file and do not affect mortgage applications or other borrowing.
- Voluntary overpayments only make sense if you expect to repay in full before write-off — typically only high earners (consistently £70,000+).
- For most graduates, extra cash is better deployed: emergency fund, pension (with tax relief and employer match), ISA, or a house deposit.
When does a borrower genuinely finish?
A Plan 5 loan ends in one of three ways:
- Full balance is repaid (interest + principal).
- 40-year write-off is reached — any remaining balance is cancelled.
- The borrower dies or is permanently unable to work due to disability — the loan is cancelled.
Moving abroad
The Student Loans Company (SLC) continues to require repayments when you move abroad. You must notify SLC of your new address and provide evidence of income. SLC applies country-specific thresholds adjusted for cost of living. Failing to notify can result in penalty charges and the whole loan plus interest becoming due immediately.
Disclaimer
This article is for general information only. Student loan rules are complex and are set by the UK Government and administered by the Student Loans Company. Thresholds, interest rates and write-off rules are subject to future policy changes. Always refer to your online SLC account and GOV.UK for the most current figures. For debt advice, contact StepChange, Citizens Advice or MoneyHelper free of charge.
FAQ
How do I know which plan I am on?
Log into your Student Loans Company account at slc.co.uk. Your plan is displayed on your dashboard. You cannot choose your plan — it is determined by when and where you started your course.
Can I be on more than one plan?
Yes. You could have both Plan 5 (undergraduate) and Postgraduate (Plan 3) if you did both. Employers deduct each according to its own threshold and rate.
Does inflation or the Bank Rate affect my interest?
Plan 5 uses the RPI rate set annually based on March RPI, applied 1 September to 31 August. For 2025/26 that rate is 3.2%. It is not directly affected by the Bank of England base rate.
