UK Student Loan Types Explained
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.
Which Student Loan Plan Do You Have? Quick Reference
Plan 1
You're on Plan 1 if:
- You started an undergraduate course before 1 September 2012 in England or Wales
- You started an undergraduate course in Northern Ireland
Plan 2
You're on Plan 2 if:
- You started an undergraduate course between 1 September 2012 and 31 July 2023 in England or Wales
Plan 4
You're on Plan 4 if:
- You started an undergraduate or postgraduate course in Scotland on or after 1 September 1998
Plan 5
You're on Plan 5 if:
- You started an undergraduate course on or after 1 August 2023 in England or Wales
Postgraduate Loan
You have a Postgraduate Loan if:
- You took out a loan for a Master's degree (available since 2016)
- You took out a loan for a Doctoral degree (available since 2018)
Comparison of All Student Loan Plans
| Feature | Plan 1 | Plan 2 | Plan 4 | Plan 5 | Postgraduate |
|---|---|---|---|---|---|
| Repayment Threshold (2023/24) | £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 |
Detailed Explanation of Each Loan Type
Plan 1 Loans
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. Key features include:
- Repayment threshold: £22,015 per year (as of 2023/24), which rises annually with inflation
- Interest rate: The lower of either RPI inflation or the Bank of England base rate plus 1% (currently 1.75%, as of December 2023)
- Write-off period: 25 years from the April after graduation for post-2006 starters, or when you turn 65 for pre-2006 starters
Plan 1 loans generally have the lowest interest rates of all the plans, though the repayment threshold is lower than Plans 2, 4, and 5, meaning you start repaying sooner.
Plan 2 Loans
Plan 2 applies to English and Welsh students who started their undergraduate courses between September 2012 and July 2023. Key features include:
- Repayment threshold: £27,295 per year (as of 2023/24), frozen until 2025
- Interest rate: Variable based on income and study status:
- While studying: RPI + 3%
- After graduation, earning under threshold: RPI only
- After graduation, earning above threshold: RPI to RPI + 3% (increasing with income)
- Write-off period: 30 years from the April after you finish your course
Plan 2 introduced significantly higher tuition fees (up to £9,250 per year) but has a higher repayment threshold than Plan 1, meaning you need to earn more before you start repaying.
Plan 4 Loans
Plan 4 applies to Scottish students who started their course on or after 1 September 1998. Key features include:
- Repayment threshold: £27,660 per year (as of 2023/24)
- Interest rate: The lower of either RPI inflation or the Bank of England base rate plus 1% (same as Plan 1)
- Write-off period: 30 years from the April after you finish your course
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 the favorable interest rate of Plan 1 with a higher repayment threshold.
Plan 5 Loans
Plan 5 is the newest undergraduate loan type, applying to English and Welsh students who started their course on or after 1 August 2023. Key features include:
- Repayment threshold: £25,000 per year (as of 2023/24)
- Interest rate: RPI only (both during and after study)
- Write-off period: 40 years from the April after you finish your course
Plan 5 introduced a lower repayment threshold than Plan 2, a simplified interest rate structure (always RPI), and a significantly longer repayment period (40 years instead of 30). This means more graduates will repay a larger portion of their loans over a longer period.
Postgraduate Loans
Postgraduate loans are available for Master's degrees (since 2016) and Doctoral studies (since 2018). Key features include:
- Repayment threshold: £21,000 per year (frozen since introduction)
- Repayment rate: 6% of income above the threshold (compared to 9% for undergraduate loans)
- Interest rate: RPI + 3% throughout the loan
- Loan amounts:
- Master's: Up to £12,167 total (2023/24)
- Doctoral: Up to £27,892 total (2023/24)
- Write-off period: 30 years from the April after you finish your course
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.
Compare Loan Repayments
See how different loan plans affect your monthly repayments