A comprehensive guide to Plan 1, Plan 2, Plan 4, Plan 5, and Postgraduate loans - understand which plan you have and how it works
The UK student loans system can be confusing due to the multiple loan plans that exist. Which plan you're on depends on when and where in the UK you studied. This guide explains each loan type, their key differences, and how to identify which plan applies to you.
The way your student loan works - including repayment thresholds, interest rates, and loan term - varies significantly depending on your plan type. Understanding your loan type is crucial for planning your finances effectively and knowing what you'll pay each month.
Each plan has different rules that were introduced at different times as the government changed how student funding works. From the oldest Plan 1 loans with their lower thresholds but favorable interest rates, to the newest Plan 5 loans with their 40-year repayment periods, each plan reflects the policy priorities at the time it was introduced.
Your loan plan depends on when you started your course and where in the UK you studied. Here's a quick way to identify which plan applies to you:
You're on Plan 1 if:
You're on Plan 2 if:
You're on Plan 4 if:
You're on Plan 5 if:
You have a Postgraduate Loan if:
Here's a comprehensive comparison of all current student loan plans showing the key differences that affect your repayments:
| Feature | Plan 1 | Plan 2 | Plan 4 | Plan 5 | Postgraduate |
|---|---|---|---|---|---|
| Repayment Threshold (2024/25) | £22,015 | £27,295 | £27,660 | £25,000 | £21,000 |
| Repayment Rate | 9% | 9% | 9% | 9% | 6% |
| Interest Rate | Lower of RPI or Bank Rate + 1% | RPI to RPI + 3% (income dependent) | Lower of RPI or Bank Rate + 1% | RPI only | RPI + 3% |
| Write-off Period | 25 years or age 65 | 30 years | 30 years | 40 years | 30 years |
The table shows the current rates for 2024/25. Note that thresholds and interest rates can change annually, so it's important to check for updates each April when the new tax year begins.
Plan 1 is the oldest loan plan still in repayment and applies to students who started their courses before September 2012 in England and Wales, or Northern Irish students from any year.
Plan 1 loans generally have the lowest interest rates of all the plans, making them relatively favorable for borrowers. However, the repayment threshold is lower than Plans 2, 4, and 5, meaning you start repaying sooner.
If you earn £30,000 per year:
The shorter 25-year write-off period means Plan 1 borrowers are more likely to pay off their loans in full compared to those on newer plans with longer repayment periods.
Plan 2 applies to English and Welsh students who started their undergraduate courses between September 2012 and July 2023. This plan was introduced alongside the increase in tuition fees to £9,000 (now £9,250).
The Plan 2 interest rate structure is more complex than other plans:
RPI + 3% (currently around 7.3%)
RPI only (currently around 4.3%)
RPI to RPI + 3% (increases with income up to £49,130)
If you earn £35,000 per year:
Plan 2 introduced significantly higher tuition fees but has a higher repayment threshold than Plan 1, meaning you need to earn more before you start repaying. The longer 30-year write-off period means many borrowers will not repay their loans in full.
Plan 4 applies to Scottish students who started their course on or after 1 September 1998. Scottish students typically have lower loan amounts as tuition fees are paid by the Scottish government for Scottish students studying in Scotland.
Plan 4 combines favorable elements from both Plan 1 (low interest rates) and Plan 2 (higher repayment threshold). This makes it one of the most borrower-friendly plans currently available.
If you earn £35,000 per year:
Scottish students studying in Scotland benefit from both lower loan amounts (due to free tuition) and favorable repayment terms, making Plan 4 particularly advantageous for Scottish graduates.
Plan 5 is the newest undergraduate loan type, applying to English and Welsh students who started their course on or after 1 August 2023. This plan represents significant changes to student loan policy.
Plan 5 introduced three major changes: a lower repayment threshold, a simplified interest rate structure (always RPI), and a significantly longer repayment period (40 years instead of 30).
If you earn £30,000 per year:
The combination of a lower threshold and longer repayment period means Plan 5 graduates will typically pay more over their lifetime compared to Plan 2 graduates, even with the lower interest rate.
Postgraduate loans are available for Master's degrees (since 2016) and Doctoral studies (since 2018). These loans work differently from undergraduate loans and have their own repayment terms.
Loan amounts vary by level of study:
Up to £12,167 total (2024/25)
Up to £27,892 total (2024/25)
If you earn £30,000 per year:
If you have both an undergraduate and postgraduate loan, you'll repay them simultaneously. This means you could pay 9% on income above the undergraduate threshold plus 6% on income above the postgraduate threshold, potentially reaching a combined rate of 15% on higher incomes.
Many people have multiple loans from different plans. This happens when you study multiple courses or when loan rules change during your studies.
If you have Plan 2 undergraduate + Postgraduate loans and earn £35,000:
Our Combined Repayment Ccalculator can help you understand your total repayments when you have loans from different plans.
If you're not sure which loan plan you're on, there are several ways to find out:
Your payslip should show student loan deductions with a plan number (SL01, SL02, SL04, SL05, or SLPG for postgraduate).
Your online account with Student Finance England, Wales, Scotland, or Northern Ireland will show your loan details and plan type.
Annual statements sent by the Student Loans Company clearly state which plan you're on and your current balance.
Based on when and where you studied, you can determine your loan plan using the quick reference section of this guide.
The UK student loans system has evolved significantly since its introduction. Each plan reflects the government's policy priorities at the time it was created:
Tuition fees introduced at £1,000 per year. Plan 1 loans created to support this change.
Tuition fees raised to £3,000 per year. Plan 1 terms adjusted to accommodate higher borrowing.
Fees increased to £9,000. Plan 2 created with higher thresholds and longer repayment terms to make higher fees manageable.
Master's (2016) and Doctoral (2018) loans introduced to support postgraduate study.
Plan 5 introduced with lower thresholds, simplified interest, and longer repayment periods to increase loan repayment rates.
Each change was made without affecting existing borrowers, creating the complex multi-plan system we have today. This approach protects existing students but creates confusion for those trying to understand the system.
The student loans system continues to evolve. Recent and upcoming changes include:
The Plan 2 threshold is frozen at £27,295 until April 2025, after which it will rise with average earnings rather than inflation.
The government regularly reviews interest rate methodologies. Recent changes have generally reduced rates from their previous peaks.
Various reforms are regularly proposed, including consolidating plans, changing interest rates, or modifying repayment terms. Any changes would likely only affect new students.
Stay informed about changes through official channels like GOV.UK and Student Finance. Changes to existing loans are rare, but new students may face different terms as policy evolves.
Understanding which student loan plan you're on is crucial for financial planning. Each plan has different rules that significantly affect how much you'll repay and when your loan will be written off.
The key differences to remember are repayment thresholds (when you start paying), interest rates (how much your debt grows), and write-off periods (when remaining debt is cancelled). These three factors combine to determine your total lifetime repayment.
Use our student loan calculator to model how different scenarios affect your specific loan plan. Understanding your loan terms helps you make informed decisions about careers, salary negotiations, and financial planning.
Remember that loan terms can change for new students, but existing borrowers are typically protected from retrospective changes. Keep track of any policy announcements that might affect future students or any loans you might take out for further study.
Use our calculators to see exactly how your specific loan plan affects your monthly payments
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With over 15 years of experience in UK education policy and student finance, Dr. Sharma founded Student Loan Calculator UK to help students navigate the complex world of student loans.