UK Student Loan Plans 1, 2, 4, 5 and Postgrad: Which Plan Am I On?
Why the plan matters
UK student loans don’t behave like other debt. Repayment is income-contingent — you pay a fixed percentage of earnings above a threshold, not a fixed monthly instalment. The plan you’re on determines the threshold, the percentage and how long any unpaid balance survives before being written off. There are five separate plans now in active repayment, and which one applies to you depends on when and where you took out the loan, not on the value of the loan itself.
Many graduates don’t actually know which plan they’re on, which makes it hard to budget for repayments or work out whether early overpayment makes sense. The first half of this guide tells you how to identify your plan; the second half explains how each one works in 2026/27.
How to tell which plan you’re on
The plan is set by where and when you started your course:
- Plan 1 — you started an undergraduate course in England or Wales before September 2012, or you started in Northern Ireland at any time (Plan 1 is the standard for Northern Ireland to this day).
- Plan 2 — you started an undergraduate course in England or Wales between September 2012 and August 2023.
- Plan 4 — you took out a student loan in Scotland (Student Awards Agency Scotland — SAAS — funding).
- Plan 5 — you started an undergraduate course in England on or after 1 August 2023 (Wales is still on Plan 2).
- Postgraduate Loan (PGL) — a separate plan for postgraduate Master’s or Doctoral loans started from August 2016 in England and Wales.
If you’re not sure, log into the Student Loans Company online account. The plan is shown at the top of your statement.
You can be on two plans at once — for example, Plan 2 for your undergraduate degree and PGL for a master’s. Each is collected separately and concurrently through your payslip.
2026/27 repayment thresholds and rates
Each plan has its own income threshold below which no repayment is due, plus a flat percentage charged on income above it.
| Plan | Annual threshold | Rate above threshold | Write-off |
|---|---|---|---|
| Plan 1 | £26,065 | 9% | 25 years after first April after graduation, or age 65 (older loans) |
| Plan 2 | £28,470 | 9% | 30 years after first April after graduation |
| Plan 4 | £32,745 | 9% | 30 years after first April after graduation |
| Plan 5 | £25,000 | 9% | 40 years after first April after graduation |
| Postgraduate | £21,000 | 6% | 30 years after first April after graduation |
(Thresholds typically update each April; figures shown are 2026/27 indicative based on published policy. Always check the SLC site for the live number for your plan year.)
How repayments are collected
If you’re on PAYE, your employer takes the right percentage from your gross pay each pay period once it’s above the weekly or monthly equivalent of the annual threshold. The deduction is rounded down to the nearest pound and applied per pay period.
A Plan 2 example: threshold £28,470 → monthly equivalent £2,372.50. You earn £3,500 in a given month. The repayment is 9% × (£3,500 − £2,372.50) = 9% × £1,127.50 = £101.47, rounded down to £101.
A few mechanical points:
- Repayments are per pay period, not cumulative. Earn £3,500 one month and £1,000 the next — the first month attracts a repayment, the second doesn’t, and there’s no balancing-up. This matters for irregular earners: a one-off bonus month can attract repayment that wouldn’t apply on an annualised basis.
- Self-employed graduates pay through Self Assessment, not PAYE. The repayment is calculated on profits above the relevant threshold and paid as part of the January tax bill.
- The Personal Allowance has no effect on the student-loan calculation — repayment is based on gross earnings, not taxable income. A salary-sacrifice pension contribution does reduce the gross figure used for student-loan repayment, which is one reason salary sacrifice is so efficient for graduates.
Use the Student Loan Repayment Calculator to model repayments across each plan at your specific salary.
Interest rates
Each plan accrues interest, and the rate varies. You can’t see the interest charge on a payslip — repayments are deducted before interest is calculated — but it determines whether the balance grows, holds steady or shrinks over time.
- Plan 1: lower of RPI or Bank of England base rate + 1%.
- Plan 2: linked to RPI, with a sliding additional rate from RPI (under threshold) up to RPI + 3% (high earners). The “in-study” rate is RPI + 3%.
- Plan 4: lower of RPI or Bank rate + 1%, similar in spirit to Plan 1.
- Plan 5: RPI only — fixed at the lower of two RPI figures, never above. This was a key design feature of the 2023 reforms.
- Postgraduate: RPI + 3%.
The combination of interest rate and threshold drives long-term outcomes. Plan 2 graduates with high earnings clear the loan before write-off; lower-earning Plan 2 graduates often pay 9% for 30 years without clearing it and have the residual written off. Plan 5 graduates face a 40-year repayment window with a much lower interest rate, so a much larger fraction of Plan 5 graduates will repay in full.
Worked example: Plan 2 graduate on £45,000
- Annual threshold: £28,470.
- Amount above threshold: £45,000 − £28,470 = £16,530.
- 9% × £16,530 = £1,488 per year.
- Monthly deduction on a steady £3,750: 9% × (£3,750 − £2,372.50) = £124.
Whether that £1,488/year clears the loan in 30 years depends on the starting balance and how interest accumulates against the repayment schedule. A typical Plan 2 graduate with £50,000 debt at graduation faces an annual interest charge of £1,500+ on Plan 2’s RPI+ rates — meaning the £1,488 of repayment in the year above barely keeps pace with interest. The balance falls only with higher earnings or accelerated repayment.
Should you overpay?
Overpaying student loans is rarely the right financial move for low-to-mid earners on Plan 1, 2, 4 or 5 because the loan is income-contingent and will be written off after the plan’s duration if not fully repaid. Paying the loan down faster than required is, in those cases, money you’d never have had to pay.
Overpayment makes sense when:
- You’re a high earner on Plan 2 or Plan 5 and on track to repay in full anyway. Reducing the principal reduces interest charges and shortens the repayment window.
- You’ve got a Plan 1, 4 or PGL loan and your salary is well above the threshold — the lower interest rates make these loans behave more like conventional debt.
Postgraduate loans deserve particular attention because the 6% rate is on top of any concurrent undergraduate repayment. A PGL borrower with a Plan 2 loan and £45,000 salary effectively pays 9% above £28,470 (Plan 2) plus 6% above £21,000 (PGL) — a combined 15% on £21,000-£28,470 of earnings and 9% + 6% = 15% on earnings above £28,470. Total deductions can reach over £3,500/year on a £45,000 salary.
Frequently asked questions
Will my employer know which plan I’m on? Yes — HMRC tells your employer which plan(s) to apply via a “start notice” once you provide your details on starting a job, or once you tick the right boxes on the new-starter checklist. If your employer is deducting the wrong plan, ask payroll to update from the current HMRC notice; corrections will reconcile via your annual statement.
I have a UK student loan but I’ve moved abroad — do I still repay? Yes. The SLC requires you to inform them you’ve moved abroad and to pay repayments directly, typically monthly. The threshold is adjusted to a local equivalent based on the country’s cost of living. Missing this step is a common cause of arrears for international graduates.
Does my student-loan deduction reduce my taxable income? No. Student-loan repayments are taken from gross pay but are not deductible against income tax. They sit after gross income for tax purposes — the deduction reduces your take-home pay but not your tax bill.
Can I switch plans? No — your plan is fixed by when and where you took the loan. There’s no facility to “switch” between plans even if a newer plan would be more favourable.
What happens if I take a career break? Repayments simply stop while your income is below the threshold. The loan continues to accrue interest. The 25/30/40-year write-off clock keeps ticking — career breaks don’t extend the loan’s lifespan.
Authoritative source: GOV.UK Repaying your student loan and Student Loans Company online account.