Plan 2 vs Plan 5 Student Loan: What's the Difference and Which Is Worse?
Published 6th November 2026·Updated 6 November 2026
Reviewed by: Money Saving Advice Editorial Team
Plan 2 vs Plan 5 Student Loan: What's the Difference and Which Is Worse?
Plan 5 is worse than Plan 2 by most financial measures. It has a lower repayment threshold, a longer repayment period before write-off, and significantly higher total repayments for most graduates. The Student Loans Company administers both — your plan depends on when and where you started your course.
The short answer
Summary
- Plan 2 applies to English and Welsh students who started university between September 2012 and July 2023
- Plan 5 applies to English students who started from August 2023 onwards
- Plan 5's repayment threshold is £25,000 (rising with average earnings) — lower than Plan 2's £27,295
- Plan 5's write-off period is 40 years, compared to 30 years under Plan 2
- Most Plan 5 graduates will repay far more in total than Plan 2 graduates, and many will repay their full balance
The short answer
This guide is for information only and does not constitute financial advice. Always check your eligibility and read the full terms before applying for any financial product.
What is Plan 2?
Plan 2 covers English and Welsh students who began university between September 2012 and July 2023, and took out a Tuition Fee Loan or Maintenance Loan. It is the most common student loan plan in England and Wales.
Plan 2 key terms:
- Repayment threshold: £27,295 per year (2026/27)
- Repayment rate: 9% of income above the threshold
- Interest rate: RPI + 0% to 3% depending on income (currently around 4.3%)
- Write-off period: 30 years after the April following graduation
What is Plan 5?
Plan 5 covers English students who started university from August 2023 onwards. It was introduced as part of the government's response to the Augar Review and represents a significant change in terms compared to Plan 2.
Plan 5 key terms:
- Repayment threshold: £25,000 per year (2026/27), rising with average earnings
- Repayment rate: 9% of income above the threshold (same as Plan 2)
- Interest rate: RPI only (no income-based surcharge)
- Write-off period: 40 years after the April following graduation
Plan 2 vs Plan 5: side-by-side comparison
| Feature | Plan 2 | Plan 5 |
|---|---|---|
| Who it covers | Started university Sep 2012 – Jul 2023 (England and Wales) | Started university Aug 2023+ (England only) |
| Repayment threshold (2026/27) | £27,295 | £25,000 |
| Repayment rate | 9% above threshold | 9% above threshold |
| Interest rate | RPI + 0–3% (income-linked) | RPI only |
| Write-off period | 30 years | 40 years |
| Typical graduate outcome | Most low-to-middle earners will not fully repay | Most graduates will repay more, many in full |
| Total loan to repay | Typically £50,000–£60,000 at graduation | Similar starting balance |
Why is Plan 5 worse for most graduates?
The combination of a lower threshold and a longer repayment period means Plan 5 graduates repay for longer and repay more in total.
Lower threshold: Under Plan 5, you start repaying at £25,000. Under Plan 2, you start at £27,295. On a salary of £30,000, Plan 5 costs £450/year more than Plan 2.
Longer write-off: Plan 2 balances are written off after 30 years. Plan 5 is 40 years. This means Plan 5 graduates who do not pay off their balance before the deadline spend an extra decade making repayments.
The paradox of Plan 5 interest: Plan 5 has lower interest rates (RPI only, no surcharge) than Plan 2. For very high earners who pay off quickly, Plan 5 can be cheaper. But for average earners who repay slowly, the lower threshold and longer period are more damaging than the interest rate is helpful.
The Institute for Fiscal Studies (IFS) estimates that the average Plan 5 graduate will repay around £20,000 more over their lifetime than the average Plan 2 graduate, when adjusting for all variables.
Who does not repay anything?
Both plans exempt graduates earning below the threshold from making any repayments. If your income stays below £25,000 (Plan 5) or £27,295 (Plan 2) throughout your career, you will never make a repayment and the balance is written off at the end of the period.
Under Plan 2, the Student Loans Company estimates roughly half of graduates will not fully repay their loan before write-off. Under Plan 5, that proportion is expected to be significantly smaller — more graduates will repay in full.
Can you overpay or pay off your student loan early?
Yes. Both Plan 2 and Plan 5 allow voluntary overpayments. There are no penalties for paying more than your required monthly repayment, and you can clear the balance entirely at any time.
Whether early repayment is worth it is a separate question. Because student loans are written off if unpaid after 30 or 40 years, early repayment is only financially beneficial if you would otherwise have repaid the full balance plus interest anyway. If you are unlikely to clear the balance within the write-off period, additional payments may be wasted.
For more on this, see our guide: Can I overpay my student loan UK? Is it worth it?.
What about Scottish and Welsh students?
Scottish students who started at a Scottish university have Plan 4, with a £31,395 threshold (2026/27) — the most generous threshold of any UK plan.
Welsh students who started from September 2012 have Plan 2 for Tuition Fee Loans, though the Welsh Government partly subsidises maintenance. Welsh students who started from 2018 may have Welsh Plan loans under different terms.
Northern Irish students have Plan 1, which carries a £24,990 threshold and a 25-year write-off.
This guide focuses on Plan 2 and Plan 5, which apply to English students (and Welsh students for tuition fee loans).
FAQ
When did Plan 5 repayments start? The first cohort of Plan 5 students (those who started in September 2023) began repaying in April 2026, the April following their typical graduation date of summer 2026. The Student Loans Company notified these graduates in advance.
Can I switch from Plan 5 to Plan 2? No. Your plan is determined by when you started your course. It is not possible to switch plans.
What if I took a gap year — which plan am I on? Your plan is determined by your course start date, not when you enrolled. If you deferred entry and started in September 2023 or later, you are on Plan 5.
Does Plan 5 interest mean I pay more over time? Plan 5 has lower interest (RPI only) than Plan 2 (which adds up to 3% above RPI for higher earners). However, the lower threshold and 40-year period mean most Plan 5 graduates pay more in total despite the lower rate.
Where can I check which plan I am on? Log in to your Student Loans Company account at gov.uk/repaying-your-student-loan. Your plan type is shown on your repayment statement.