Plan 5 Student Loan Calculator
Plan 5 is the newest plan with a lower threshold and lower interest but a longer 40-year write-off period.
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Complete Guide to Plan 5 Student Loans (Post-2023)
Plan 5 is the newest UK student loan repayment plan. It was introduced for students starting undergraduate courses in England from 1 August 2023 onwards and represents the government's latest attempt to reform the student loan system. Plan 5 was created following the Augar Review of post-18 education funding, which recommended significant changes to how student loans work.
The headline changes compared to the previous Plan 2 are: a lower repayment threshold(£25,000 vs £29,385), a lower interest rate (RPI only, with no additional margin), and a significantly longer write-off period (40 years vs 30 years). Whether these changes make Plan 5 "better" or "worse" for borrowers depends entirely on individual circumstances — but for many moderate earners, Plan 5 may actually result in higher total lifetime repayments despite the lower interest rate.
Who Has a Plan 5 Loan?
- English students who started an undergraduate course on or after 1 August 2023
- Students who took out an Advanced Learner Loan in England on or after 1 August 2023
Plan 5 applies specifically to England only. Welsh students starting from 2023 are on a different arrangement, Scottish students are on Plan 4, and Northern Irish students from this era are also handled separately. If you started before August 2023 in England, you are on Plan 2. Our which plan am I on? guide can help confirm your plan.
Key Plan 5 Facts for 2026/27
- Annual repayment threshold: £25,000 per year (£2,083.33 per month, or £481 per week)
- Repayment rate: 9% of your gross income above the threshold
- Interest rate: RPI only — currently 3.2% with no additional margin
- Write-off period: 40 years after the April you were first due to repay
- Collection method: PAYE (automatic) or Self Assessment if self-employed
- Maximum tuition fees: £9,790 per year
Plan 5 vs Plan 2 — Detailed Comparison
Understanding the differences between Plan 5 and Plan 2 is crucial, as many of the changes have trade-offs that are not immediately obvious:
| Feature | Plan 2 | Plan 5 | Impact |
|---|---|---|---|
| Threshold | £29,385 | £25,000 | Plan 5 borrowers start repaying £4,385 sooner |
| Interest rate | RPI to RPI + 3% | RPI only | Plan 5 balances grow more slowly |
| Write-off | 30 years | 40 years | Plan 5 borrowers repay for 10 years longer |
| Max tuition fees | £9,250 | £9,790 | Plan 5 fees are now higher |
| Repayment rate | 9% | 9% | No difference |
Why the Lower Interest Rate Doesn't Always Help
At first glance, the lower interest rate on Plan 5 (RPI only vs RPI + up to 3% on Plan 2) seems like a clear improvement. And for your balance, it is — your loan grows more slowly. However, the combination of a lower threshold and a 40-year repayment window can more than offset this advantage.
Consider a graduate earning £35,000 per year:
- On Plan 2: They repay 9% of (£35,000 − £29,385) = £505.35/year for up to 30 years
- On Plan 5: They repay 9% of (£35,000 − £25,000) = £900/year for up to 40 years
Over the full repayment period, the Plan 5 borrower repays more per year and for longer. For a borrower whose salary grows moderately, the total amount repaid under Plan 5 can exceed the total under Plan 2 — even though the interest rate is lower. The net effect depends on your career earnings trajectory, which is why running the calculator above with your specific numbers is so important.
Repayment Examples at Different Salaries
| Annual Salary | Income Above Threshold | Annual Repayment | Monthly Repayment |
|---|---|---|---|
| £24,000 | £0 (below threshold) | £0 | £0 |
| £27,000 | £2,000 | £180 | £15.00 |
| £30,000 | £5,000 | £450 | £37.50 |
| £35,000 | £10,000 | £900 | £75.00 |
| £40,000 | £15,000 | £1,350 | £112.50 |
| £50,000 | £25,000 | £2,250 | £187.50 |
| £75,000 | £50,000 | £4,500 | £375.00 |
Notice that Plan 5 repayments at the same salary are higher than Plan 2 repayments. For example, at £35,000, a Plan 5 borrower pays £75/month compared to £42/month under Plan 2. That's £396 more per year — and this difference compounds over 40 years.
The 40-Year Write-Off: What It Means
Plan 5 has the longest write-off period of any UK student loan plan at 40 years. For a student graduating in 2026, the write-off date would be approximately April 2067. If you graduate at age 21, your loan would be written off when you are 62 — close to state pension age.
This has significant implications. Under Plan 2's 30-year write-off, a graduate would be free of repayments in their early 50s. Under Plan 5, repayments continue through some of the highest-earning years of a career (the 50s and early 60s). For full details on write-off rules, see our guide on when your student loan is written off.
Should Plan 5 Borrowers Overpay?
Given the lower interest rate (RPI only), the case for overpaying a Plan 5 loan is even weaker than for Plan 2. The 3.2% interest rate is below what you can earn in many savings accounts or investments, and the 40-year write-off period means an even larger proportion of borrowers will have their loan cancelled before they repay in full.
The general advice remains the same: only consider overpaying if you are confident you would repay the full balance before the 40-year write-off. For the vast majority of Plan 5 borrowers, the money would be better used for pension contributions (especially via salary sacrifice), building savings, or investing. Use our early repayment calculator to model your specific situation.
Threshold Freezes and Future Changes
The Plan 5 threshold of £25,000 is intended to remain fixed and not increase with inflation for the foreseeable future. This is a deliberate policy choice — as general wages rise with inflation over the coming decades, the threshold stays flat, meaning a growing proportion of income falls above it and repayments increase in real terms. This "fiscal drag" effect is a key mechanism through which the government expects to recover a higher proportion of Plan 5 loans compared to Plan 2.
However, future governments could change this policy. Thresholds could be raised, lowered, or linked to inflation. No current borrower should assume the terms will remain exactly as they are for 40 years.
Salary Sacrifice and Plan 5
For Plan 5 borrowers, salary sacrifice pension contributions are an especially powerful tool. Because the threshold is £25,000 (lower than other plans), more of your income falls above it, and more of your salary sacrifice saves you money. For every £100 you sacrifice, you save £9 in student loan repayments plus income tax and National Insurance savings. Over a career, this adds up significantly. Read our salary sacrifice guide for full details.
Related calculators and guides: Plan 2 Calculator · Compare Plan 2 vs Plan 5 · Write-off periods · Interest rates explained · Early repayment calculator · Salary sacrifice guide