UK Student Loan Plan 5 Explained 2026: What 2023 Starters Will Actually Repay
Radu Danila • 28 May 2026
If you started university in the 2023/24 academic year or later, you are on Plan 5. That sentence sounds like a small bureaucratic detail. It is not. Plan 5 is a different loan plan from Plan 2, with a different repayment threshold, a different interest rate, and a write-off rule that is ten years longer. The number you actually repay across your lifetime depends on which plan you are on, and most students never check.
Most graduates only find out which plan they are on when their first payslip lands and money comes out for "Student Loan". By then, the rules are already running in the background. This guide explains what Plan 5 means for you in 2026, what changes from Plan 2, and how to work out what you are likely to repay over a working career.
Quick answer: what is Plan 5 in one paragraph?
Plan 5 applies to anyone who started an English higher education course on or after 1 August 2023. You repay 9% of everything you earn above £25,000 a year, which works out at £2,083 a month or £480 a week. Interest is capped at RPI inflation only, so your balance does not grow faster than the cost of living. Anything still outstanding is written off 40 years after the April you first became liable to repay. The £25,000 threshold is frozen until April 2027.
Who is on Plan 5
Plan 5 applies to you if all three of the following are true:
- You started a full-time, part-time, or accelerated higher education course on or after 1 August 2023
- The course is funded by Student Finance England (Wales, Scotland, and Northern Ireland use their own systems)
- You took out a Tuition Fee Loan, a Maintenance Loan, or both
Plan 5 does not apply if you started before September 2023. In that case, you are most likely on Plan 2 (which covers starters from 2012 to 2023), or on Plan 1 if you started earlier. Postgraduate loans run on a separate Postgraduate Loan plan with its own rules.
If you do not know which plan you are on, log into your Student Loans Company account. The plan number is listed in your loan summary. If you started a second course after a first one, you may have two balances running in parallel, each on its own plan.
What changes between Plan 2 and Plan 5
The Plan 5 rules look small on paper. In practice, they shift the cost of your degree forward by years and across more of your working life. The four key differences are below.
| Rule | Plan 2 | Plan 5 |
|---|---|---|
| Repayment threshold | £28,470 a year | £25,000 a year |
| Repayment rate above threshold | 9% | 9% |
| Interest while studying | RPI plus 3% | RPI only |
| Interest after graduation | RPI plus 0% to 3% (income-tapered) | RPI only |
| Write-off period | 30 years | 40 years |
| Applies to starters from | 2012/13 to 2022/23 | 2023/24 onwards |
Three of those differences matter for what you actually pay.
The lower threshold of £25,000 means you start repaying earlier in your career. That £3,470 gap costs the average graduate roughly £312 a year extra in repayments compared with Plan 2 at the same salary.
The lower interest rate is a real win for current students. Under Plan 2, your debt grew at RPI plus 3% during the years you were studying, which meant you graduated owing significantly more than you borrowed. Under Plan 5, your balance grows in line with inflation only, which keeps the real cost of the debt stable.
The 40-year write-off is the biggest structural change. On Plan 2, the 30-year clock ran out for most graduates before they had repaid the full loan plus interest. The Office for Budget Responsibility estimated that 27% of Plan 2 borrowers would repay in full. On Plan 5, the figure is projected to reach 64%. That difference is by design. The government wanted more graduates to clear the full balance.
What you will pay each month at different salaries
Plan 5 repayments are calculated on gross income above the threshold, not your take-home pay. Here is what that looks like at common salary points.
| Annual salary | Income above £25,000 | Monthly repayment |
|---|---|---|
| £22,000 | £0 | £0 |
| £25,000 | £0 | £0 |
| £28,000 | £3,000 | £22.50 |
| £32,000 | £7,000 | £52.50 |
| £40,000 | £15,000 | £112.50 |
| £50,000 | £25,000 | £187.50 |
| £65,000 | £40,000 | £300 |
| £80,000 | £55,000 | £412.50 |
If your income drops below £25,000 in a given month, you stop repaying for that month. Repayments are calculated each pay period, not annually, so a one-off bonus that pushes you over the threshold only triggers a higher repayment that month.
If you are self-employed, repayments are calculated once a year through your Self Assessment return.
Why Plan 5 was introduced
Plan 5 was announced as part of the 2022/23 Higher Education reform package and applied from August 2023 onwards. The official reasoning was twofold. The government wanted to reduce the long-term cost to the taxpayer of student loans being written off, and it wanted graduates closer to covering the actual cost of their education.
In practice, Plan 5 shifts more of the repayment burden onto middle and higher earners. The lower threshold reaches more graduates earlier. The longer write-off means fewer graduates escape the balance before the clock runs out. The lower interest rate offsets some of this, but for most graduates with average to good earnings, total lifetime repayments are higher on Plan 5 than they would have been on Plan 2.
If you want the wider picture of how repayment policy has evolved, the UK Student Loan Repayment Thresholds 2025/26 and 2026/27 guide walks through every plan in parallel.
What this means over your career
Imagine you graduate at 22, work continuously, and retire at 67. That is 45 years of working life.
On Plan 2, you would stop repaying at age 52, when the 30-year clock runs out, even if you still had a balance. On Plan 5, you keep repaying until age 62 unless you clear the loan sooner.
For a graduate earning around £40,000 in real terms across that career, the total lifetime cost looks like this:
- Plan 2: roughly £45,000 to £55,000 in total repayments before the write-off
- Plan 5: roughly £70,000 to £85,000 in total repayments, with most graduates clearing the full balance
The exact number depends on starting salary, salary growth, career breaks, and inflation. The direction is consistent. Plan 5 graduates repay more, for longer, with fewer benefiting from the write-off.
What adults switching to Plan 5 underestimate
A lot of mature students who return to study from 2023 onwards assume the student loan system has not really changed. It has, and the difference matters most for people closer to mid-career.
If you are 35 when you start your degree and graduate at 39, you will be repaying until age 79 under the 40-year rule, well past most retirement ages. In practice, most repayments happen during your working years and the loan tails off when income drops. But the loan is still on your record for far longer than under Plan 2.
This matters for two reasons. Mortgage affordability calculations include student loan repayments, so the lower threshold of £25,000 hits home-buying years earlier. And career changes into lower-paid sectors mean repayments stop, but the loan keeps accruing inflation-linked interest in the background.
Should you pay off your Plan 5 loan early?
For most graduates, no.
The interest rate on Plan 5 is RPI only, which is broadly the same as inflation. Paying off a loan whose real value does not grow gives you very limited financial advantage compared with using that money for a pension, a deposit, or higher-interest debt.
Early repayment may make sense in three specific cases:
- You are a high earner who will clearly repay the full loan plus interest, and clearing it early shortens the period the loan affects your income.
- You have no other higher-interest debt (credit card, personal loan, car finance).
- You have no other competing goal for that cash (emergency fund, mortgage deposit, employer pension match).
For most graduates with average earnings and a sensible mix of savings goals, paying the minimum monthly contribution is the right answer.
How to check your balance and your plan
Two checks are worth running once a year.
Plan check. Log into your Student Loans Company account on gov.uk. Your plan number appears at the top of your loan summary.
Balance check. The Student Loans Company shows your current balance, interest accrued in the past 12 months, and total repayments to date. If you spot a balance that looks wrong, raise a query within the portal rather than waiting until tax year end.
If you switch from PAYE employment to self-employment, your repayments move from automatic payroll deductions to annual Self Assessment calculations. Keep your annual income records, because the Student Loans Company reconciles balances with HMRC roughly once a year.
The biggest mistake Plan 5 students make
The biggest mistake is treating Plan 5 like background noise. Monthly repayments in your twenties feel small. By your forties, your salary has risen, your repayment has risen with it, and the loan is still sitting on the same balance because RPI interest has matched what you have been paying off.
The mistake is assuming the loan "goes away" after a fixed point. On Plan 5, in most cases, it does not. You repay until the loan is cleared or until 40 years pass, whichever comes first.
The correct mental model is: Plan 5 is a graduate income tax of 9% on everything you earn above £25,000, with a 40-year time limit. Treat it that way and plan accordingly.
Instead of asking "Am I on the worse plan?", ask this
| Instead of | Better question |
|---|---|
| Am I on the worse plan? | Will my career path actually clear the loan, or will I repay for 40 years? |
| Should I clear the loan early? | What is the opportunity cost compared with pension or deposit? |
| Does Plan 5 make the degree worse? | Does the degree still produce the salary uplift to justify the repayments? |
| Should I avoid taking the loan at all? | Is paying upfront feasible without weakening my emergency fund? |
You cannot change your plan. You can change how you plan around it.
Before you apply, check the wider picture
A Plan 5 loan can still be the right call for adult learners returning to study, especially if the degree leads into a higher-paying field or unlocks a regulated profession. But the maths only works if the degree, the salary direction, and the loan rules fit together.
With UniStart, you can:
- See which Student Finance plan applies to your start year
- Estimate your maximum maintenance loan for 2026/27
- Compare adult-entry routes and foundation year options
- Get free one-to-one support before applying
Explore Student Finance routes at unistart.app/funding
Important
Student Finance rules, repayment plans, and eligibility depend on your residency, your course, your start date, and your personal circumstances. This guide is general information only and is not financial or career advice. Always check your specific position on gov.uk and inside your Student Loans Company account before making financial decisions.
Sources
- GOV.UK Repaying your student loan: which plan you are on
- GOV.UK Student Finance for undergraduates
- House of Commons Library: Student loan interest rates and repayment thresholds FAQs
- Student Loans Company portal
FAQ
Is Plan 5 worse than Plan 2 for most graduates?
For low earners across a career, the threshold drop is the main hit, but you also benefit from lower interest. For middle and high earners, Plan 5 typically means more total lifetime repayments because of the 40-year write-off.
Can I switch from Plan 5 to Plan 2?
No. Your plan is fixed by your course start date. There is no opt-in or opt-out across plans.
Does Plan 5 apply if I study part-time?
Yes, provided your course started on or after 1 August 2023 and is funded through Student Finance England.
Will the £25,000 threshold rise?
The threshold is frozen until April 2027. After that, the government has indicated it will rise with inflation, but this depends on future policy decisions.
What happens to my Plan 5 loan if I die?
The loan is cancelled. Student loan debt is not inherited by your estate or family members.
What if I leave the UK after graduating?
You still repay Plan 5 from overseas income. The Student Loans Company sets country-specific repayment thresholds based on local cost of living. If you stop confirming your income, the system can switch you to a default fixed monthly repayment, which is higher than the income-calculated rate.
Does Plan 5 cover postgraduate study?
No. Postgraduate Master's and Doctoral loans run on a separate Postgraduate Loan plan with a different threshold and a 6% repayment rate above £21,000. Plan 5 covers undergraduate study only.