Plan 5 repays £395 a year more than Plan 2 on the same salary — and for 10 years longer.
ESTIMATE
Illustrative estimates for the 2026/27 tax year (6 April 2026 – 5 April 2027) as of 3 November 2026 — not financial advice. Thresholds from GOV.UK; interest rates for 1 September 2026 – 31 August 2027 from the Student Loans Company. Your payslip may differ by a pound or two because payroll rounds each pay period.
Plan 5 charges less interest than Plan 2 but starts repayments earlier and lasts ten years longer. The threshold is £25,000 instead of £29,385, so on any salary above both a Plan 5 graduate repays £395 a year more, and the balance is written off after 40 years rather than 30. For most middle earners that means repaying far more over a lifetime, even though the interest rate is lower.
Plan 2 vs Plan 5 side by side
Plan 2
Plan 5
Threshold 2026/27
£29,385
£25,000
Repayment rate
9% above threshold
9% above threshold
Interest after study (from Sept 2026)
4.1%–7.1% by income, capped at 6%
RPI only: 4.1%
Interest while studying
RPI + 3% (capped at 6% in 2026/27)
RPI: 4.1%
Written off after
30 years
40 years
Threshold changes
Frozen at £29,385 to April 2030
£25,000 until April 2027, then RPI uprating
Who
England & Wales, started Sept 2012 – July 2023 (Wales also later)
England, started from 1 Aug 2023
Why Plan 5 was introduced
Plan 5 came from the government’s 2022 response to the Augar review of post-18 education. Under Plan 2, official estimates suggested a large share of the money lent would never be repaid, because many graduates do not earn enough over 30 years to clear balances that keep growing at up to RPI + 3%. Plan 5 shifts that balance: interest is cut to RPI so balances no longer grow faster than inflation, but the lower threshold and 40-year term mean most graduates repay for most of their working lives. Tuition fees themselves were not cut, so balances at graduation are similar.
Monthly repayments: Plan 5 always costs more
Because both plans take 9%, the monthly difference is fixed by the gap between thresholds. Above £29,385, a Plan 5 graduate pays £395 a year more (about £33 a month). Between £25,000 and £29,385 the Plan 5 graduate repays and the Plan 2 graduate does not — on £28,000 that is £22 a month against nothing.
Interest: Plan 2 grows faster
From 1 September 2026, Plan 5 interest is 4.1% — the March 2026 RPI. Plan 2 is 4.1% for incomes up to £29,385, rising on a sliding scale to RPI + 3% (7.1%) at £52,885; for 2026/27 the government has capped it at 6%, which bites from about £44,268. On a £45,000 balance, a Plan 2 graduate earning £50,000 is charged about £2,700 of interest this year; the same balance on Plan 5 attracts £1,845. See how student loan interest is calculated.
See your full payslip
Add your student loan plan to the UK take-home pay calculator to see income tax, National Insurance, pension and loan repayments together for 2026/27.
We modelled a £45,000 balance for graduates who start repaying in April 2026, with pay rising 3% a year and RPI at 3% after this year. These are illustrations, not forecasts, but the pattern is robust:
Total repaid over the life of a £45,000 loan by starting salary. Assumes pay +3% a year and RPI 3%.
Lower and middle earners repay much more under Plan 5 because they keep paying for 40 years. The highest earners can repay less under Plan 5, because they clear the balance either way and Plan 5 charges less interest along the way. The crossover depends on your balance and career, so treat the table as a guide to the shape, not a personal forecast.
Can I switch from Plan 2 to Plan 5?
No. Your plan is fixed by when your course started, and there is no option to move between plans. The comparison is useful mainly for understanding your own loan — for example, a Plan 5 graduate is more likely to clear the balance and so has a stronger case for considering overpayments, while many Plan 2 graduates do not (see should I overpay my student loan?).
Which is “better”?
Neither plan is a commercial debt: repayments stop if your income falls, nothing is owed on credit files, and the remainder is cancelled. Plan 2 is more generous to people with modest or interrupted earnings — career breaks, part-time work, or long periods below £29,385. Plan 5 is more predictable for higher earners, whose balance no longer grows faster than inflation. The Plan 2 threshold freeze to April 2030 narrows the gap a little, because more of each Plan 2 graduate’s salary becomes repayable as wages rise.
FAQ
What is the difference between Plan 2 and Plan 5?
Plan 5 has a lower repayment threshold (£25,000 against £29,385 in 2026/27), charges interest at RPI only (4.1% from September 2026) instead of up to RPI + 3%, and is written off after 40 years instead of 30.
Is Plan 5 worse than Plan 2?
For most low and middle earners Plan 5 means repaying more over a lifetime, because repayments start earlier and last ten years longer. Very high earners may repay less under Plan 5 because of its lower interest rate.
How much more do I pay each month on Plan 5?
Above £29,385 a Plan 5 graduate repays £395 a year (about £33 a month) more than a Plan 2 graduate on the same salary.
Can I move from Plan 2 to Plan 5?
No. Your plan type is set by your course start date and cannot be changed.
Does Plan 5 interest depend on income?
No. Plan 5 interest is RPI for everyone (4.1% from 1 September 2026 to 31 August 2027), whether studying or working.
GOV.UK, Repaying your student loan – what you pay: 2026/27 thresholds Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000, Postgraduate Loan £21,000; 9% (6% for PGL) of income above the threshold; rules for more than one plan (read 3 November 2026).
Student Loans Company / Department for Education, Student loans interest rates and repayment threshold announcement, 10 August 2026: RPI 4.1%; Plan 1 4.1%; Plan 2 4.1%–7.1% capped at 6%; Plan 3 (Postgraduate) capped at 6%; Plan 5 4.1% (1 Sep 2026 – 31 Aug 2027); Plan 1 threshold £28,005 from 6 April 2027.
Department for Education press release, Interest rate cap introduced to protect Plan 2 borrowers, 7 April 2026, and written ministerial statement of 13 April 2026: 6% cap for 2026/27; Plan 2 upper interest threshold £52,885 from 6 April 2026.
Autumn Budget 2025 (26 November 2025): Plan 2 repayment threshold frozen at £29,385 for 2027/28 to 2029/30 (reported by Which?, 5 December 2025).
Take-home pay: HMRC 2026/27 income tax and National Insurance for England, Wales and Northern Ireland (personal allowance £12,570, 8%/2% employee NI), as used on our UK salary after tax pages.