Student loan Plan 2 vs Plan 5: what you repay in 2026/27
Plain-English guide · Free financial education from OfferWise
The short answer
Plan 5 starts taking repayments sooner, at £25,000 a year instead of £29,385, and lasts 10 years longer before anything left is written off. In return, it charges less interest: 4.1% this year, against up to 6% on Plan 2. Both take 9% of what you earn above the threshold, never 9% of your whole salary.
Which plan are you on?
It depends on when you started your undergraduate course, not when you finished. If you are from England and started between 1 September 2012 and 31 July 2023, you are on Plan 2. If you started on or after 1 August 2023, you are on Plan 5. If you are not sure, the Student Loans Company can tell you.
Courses starting on or after 1 January 2027 move to the new Lifelong Learning Entitlement. GOV.UK says those loans are repaid once you earn over £25,000 a year and written off 40 years after the April you are first due to repay.
Side by side
| Plan 2 | Plan 5 | |
|---|---|---|
| Who it applies to | Undergraduates from England who started between 1 September 2012 and 31 July 2023 (and Wales from September 2012) | Undergraduates from England who started on or after 1 August 2023 |
| Repayment threshold | £29,385 a year (£2,448.75 a month) | £25,000 a year (£2,083.33 a month) |
| You repay | 9% of pay above the threshold | 9% of pay above the threshold |
| Interest, 1 September 2026 to 31 August 2027 | 4.1% to 6%, depending on your income | 4.1% |
| Written off | 30 years after the April you were first due to repay | 40 years after the April you were first due to repay |
What you repay at different salaries (2026/27)
| Salary | Plan 2 | Plan 5 |
|---|---|---|
| £25,000 | Nothing | Nothing |
| £28,000 | Nothing | £270 a year£22.50 a month |
| £32,000 | £235.35 a year£19.61 a month | £630 a year£52.50 a month |
| £40,000 | £955.35 a year£79.61 a month | £1,350 a year£112.50 a month |
| £50,000 | £1,855.35 a year£154.61 a month | £2,250 a year£187.50 a month |
At £28,000, a Plan 2 graduate repays nothing while a Plan 5 graduate on the same salary repays £270 a year. The gap stays at about £395 a year once both are above their thresholds, because the thresholds are £4,385 apart. Figures assume this is your only income and you have no postgraduate loan.
It is worked out on each payslip, not your yearly salary
Your employer takes repayments through payroll, like tax. Each payslip is checked against the monthly threshold: £2,448.75 on Plan 2 and £2,083.33 on Plan 5. So a month with a bonus or overtime can trigger a repayment even if your yearly salary is below the threshold. If your total income for the year ends up under the yearly threshold, you can ask the Student Loans Company for a refund after the tax year ends.
Why the balance can go up while you are paying
Interest is added every month. If the interest added in a year is more than you repay, the balance grows even though money comes off every payslip. That is normal in the first years after university, especially on Plan 2. On Plan 2 the rate depends on your income: 4.1% at £29,385 or less, rising towards 7.1% for higher earners. The government has capped it at 6% from 1 September 2026 to 31 August 2027.
What it means when you compare job offers
Your plan does not change which offer is better, but it does change what you take home from each. Once you are above your threshold, every extra pound of salary loses 20% income tax, 8% National Insurance and 9% student loan for a basic-rate taxpayer. That is 37p in every pound, so a £2,000 pay rise is worth about £1,260 a year in your pocket. Benefits such as a strong employer pension, extra holiday or a shorter commute are not reduced by student loan repayments, which makes them worth comparing carefully.
Should you pay it off early?
That depends on how much you are likely to earn over the whole repayment period, which nobody knows at the start of a career. Anything left at the write-off date is cancelled, so money paid early only saves you something if you would otherwise have repaid the full balance. It is worth understanding how write-off works before deciding.
Comparing job offers? OfferWise scores salary, pension, benefits and your commute in one number — free.
Compare your offers free →Want the full picture, including interest over time and write-off? It is covered in the Academy lesson Student loans explained.