Plan 2 vs Plan 4: Which Student Loan Costs You More?
Comparing Plan 2 (England/Wales) and Plan 4 (Scotland) undergraduate student loan repayment plans
This page sets the Plan 2 student loan against student loan Plan 4 on threshold, interest 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 4 (Scottish undergraduate loans) has a significantly higher threshold than Plan 2: £33,795/year against £29,385/year in 2026-27
- Plan 4 uses the same interest formula as Plan 1 — the lower of RPI (4.1%) or base rate + 1% — while Plan 2 charges up to RPI + 3% (7.1% uncapped), capped at 6%, on a sliding scale based on your income
- Both plans write off after 30 years from the April you first become due to repay (for loans taken after August 2007)
- Plan 2 and Plan 4 are geographically exclusive: you get Plan 2 if you studied in England/Wales (2012–2023) and Plan 4 if you studied in Scotland — you cannot hold both
- At a £40,000 salary, you repay about £79.61/month on Plan 2 versus £46.54/month on Plan 4 — Scottish borrowers pay substantially less due to the £4,410 higher threshold
Key Differences at a Glance
| Feature | Plan 2 | Plan 4 |
|---|---|---|
| Who has it? | Undergraduate students who started between Sept 2012 and Aug 2023 in England/Wales | Undergraduate students in Scotland, funded by SAAS (all years) |
| Loan Type | Undergraduate tuition and maintenance | Undergraduate maintenance (tuition covered by SAAS) |
| Repayment Threshold | £29,385 per year | £33,795 per year |
| Repayment Rate | 9% of income above threshold | 9% of income above threshold |
| Interest Rate | Variable from RPI up to a capped maximum of 6%, depending on income | Lower of RPI or Bank of England base rate + 1% |
| Write-off Period | 30 years after graduation | 30 years after graduation |
| Maximum Loan Amount | £40,000-£60,000 (varies by course length) | Maintenance loan only, amount varies by household income |
Plan 2 and Plan 4 are both undergraduate repayment plans. Which one you hold depends on which body paid your loan: Student Finance England or Student Finance Wales for Plan 2, the Student Awards Agency Scotland (SAAS) for Plan 4. Holding both is unusual. It happens when an English- or Welsh-funded undergraduate later moves to Scotland and takes a SAAS postgraduate loan, which is repaid under Plan 4. If that is you, try our student loan calculator UK to see the combined monthly deduction.
Repayment Comparison
Understanding how Plan 2 and Plan 4 differ in repayment structure is crucial, especially if you hold both loans. Plan 4 has a higher threshold (£33,795) than Plan 2 (£29,385), but both charge the same 9% repayment rate above their respective thresholds.
Monthly Repayment Comparison
| Annual Salary | Plan 2 Monthly Repayment | Plan 4 Monthly Repayment | Combined Total |
|---|---|---|---|
| £25,000 | £0.00 | £0.00 | £0.00 |
| £30,000 | £4.61 | £0.00 | £4.61 |
| £35,000 | £42.11 | £9.04 | £51.15 |
| £40,000 | £79.61 | £46.54 | £126.15 |
| £50,000 | £154.61 | £121.54 | £276.15 |
| £60,000 | £229.61 | £196.54 | £426.15 |
Key Takeaway on Combined Repayments
If you have both Plan 2 and Plan 4 loans, you'll make repayments on both simultaneously once your income exceeds each threshold. This means:
- Plan 2 repayments start at £29,385 annual salary (9% above threshold)
- Plan 4 repayments start at £33,795 annual salary (9% above threshold)
- Above £33,795, you'll pay both loans simultaneously
- Between £29,385 and £33,795 only the Plan 2 deduction applies; above £33,795 the combined rate is effectively 18% (9% + 9%) on the income above £33,795
- At £40,000 salary, combined repayments are £126.15 per month (£1,513.80 per year)
Important for Postgraduate Students
If you completed an undergraduate degree with a Plan 2 loan and then took out a SAAS-funded postgraduate loan, which is repaid under Plan 4, you repay both at once. The far more common stack is Plan 2 plus the English Postgraduate Loan (Plan 3), which takes 6% above its own £21,000 threshold. Either way, factor the combined deduction into your career planning and budget.
When to Consider a Postgraduate Loan on Top of Plan 2
A postgraduate loan can be a valuable investment in your career, but it is worth weighing the financial implications if you already have a Plan 2 undergraduate loan. For most English and Welsh graduates the postgraduate loan is the Postgraduate Loan (Plan 3), not Plan 4; the points below apply to that loan.
Good reasons to take a Postgraduate Loan
- Your Master's will significantly increase earning potential
- Required for your chosen career path (e.g., teaching, social work)
- Lower repayment rate (6%) than the 9% on Plan 2
- Same 30-year write-off period as Plan 2
- Smaller loan amount than undergraduate (max £13,206 for a Master's)
Consider carefully if
- You already have a large Plan 2 loan balance
- Expected salary increases won't justify the cost
- You could fund the Master's through savings or employer sponsorship
- Combined 15% repayment rate would strain your budget
- Your career doesn't require a postgraduate qualification
Calculate Your Repayments
Use our calculators to see exactly how much you'll repay on your specific loan plan