Plan 1 vs Plan 2: Which Student Loan Costs You More?
Comparing pre-2012 and post-2012 UK student loan repayment plans
This page sets the Plan 1 student loan against the Plan 2 student loan on threshold, interest, write-off and monthly cost. Each plan page holds the full rules, and both are two of the five UK student loan plans. If you are not sure which applies to you, start with how to find out which student loan plan you are on.
Key Takeaways
- Plan 1 threshold rises to £26,900/year from April 2026; Plan 2 rises to £29,385/year — a £2,485 gap that determines when you start repaying
- At a £30,000 salary, you repay £23.25/month on Plan 1 versus £4.61/month on Plan 2 — Plan 1 costs £18.64 more per month due to its lower threshold
- Plan 1 interest is the lower of RPI (currently 4.1%) or Bank of England base rate + 1%; Plan 2 charges up to RPI + 3% (7.1% uncapped), capped at 6% for higher earners
- Plan 1 loans write off 25 years after the April you first became due to repay (post-Sep 2006 loans) or at age 65 (pre-Sep 2006 loans); Plan 2 writes off after 30 years
- From April 2027, the Plan 2 threshold freezes at £29,385 for 3 years — meaning more of your income falls above the repayment line each year as wages rise
Key Differences at a Glance
| Feature | Plan 1 | Plan 2 |
|---|---|---|
| Who has it? | Students who started before Sept 2012 in England/Wales, or Northern Irish students | Students who started between Sept 2012 and Aug 2023 in England/Wales |
| Repayment Threshold | £26,900 per year | £29,385 per year |
| Interest Rate | Lower of RPI or Bank of England base rate + 1% | Variable from RPI up to a capped maximum of 6%, depending on income |
| Write-off Period | 25 years after graduation or age 65 | 30 years after graduation |
| Average Loan Size | £12,000-£25,000 | £40,000-£60,000 |
Plan 1 and Plan 2 are the two main undergraduate student loan types in the UK, introduced at different times and with significantly different terms. Use our student loan calculator to model your exact monthly repayments under either plan, then review this detailed comparison to understand the key differences and how they affect your long-term costs.
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Repayment Comparison
The most obvious difference between Plan 1 and Plan 2 is when you'll start making repayments. With Plan 1's lower threshold (£26,900), you'll start repaying sooner than with Plan 2 (£29,385).
Monthly Repayment Comparison
| Annual Salary | Plan 1 Monthly Repayment | Plan 2 Monthly Repayment | Difference |
|---|---|---|---|
| £25,000 | £0.00 | £0.00 | Below both thresholds |
| £30,000 | £23.25 | £4.61 | £18.64 more on Plan 1 |
| £35,000 | £60.75 | £42.11 | £18.64 more on Plan 1 |
| £40,000 | £98.25 | £79.61 | £18.64 more on Plan 1 |
| £50,000 | £173.25 | £154.61 | £18.64 more on Plan 1 |
Key Takeaway on Repayments
Plan 1 borrowers consistently pay more per month at any given salary level compared to Plan 2 borrowers. This is because:
- The Plan 1 threshold is £2,485 lower than Plan 2
- This creates a consistent difference of about £18.64 per month (£2,485 × 9% ÷ 12) once both thresholds are cleared
- At salaries below the Plan 2 threshold, the difference can be even more significant
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Calculate Your Repayments
Use our calculators to see exactly how much you'll repay on your specific loan plan