Student Loan Plan 4: Threshold, Interest and Write-Off (Scotland)
Plan 4 borrowers repay 9% of income above £33,795 a year (£2,816 a month) in 2026-27, and any balance left is written off after 30 years.
- Threshold (2026-27)
- £33,795
- You repay
- 9%
- Written off after
- 30 years
Source: GOV.UK, Repaying your student loan: how much you repay (opens in a new tab)
Student loan Plan 4 is the repayment plan for borrowers funded by the Student Awards Agency Scotland (SAAS). The 2026-27 Plan 4 student loan threshold is £33,795 (£2,816 a month), and you repay 9% of income above it. Interest is the lower of RPI or Bank of England base rate plus 1%, and the balance is written off after 30 years.
Written by Student Loan Calculator UK Editorial Team, reviewed by Student Loan Calculator UK Editorial Team ·
Plan 4 is one of five UK student loan plans, and the only one where SAAS, not Student Finance England, paid the money out. HMRC still collects it through PAYE like every other plan. For who to contact, how the Scottish system differs from England and Wales, and where to check a SAAS balance, read SAAS repayment. This page covers the Plan 4 rules and worked examples.
Who is on Plan 4?
Plan 4 covers all students funded by the Student Awards Agency Scotland (SAAS). The most common cohort is Scottish-domiciled students who studied at any UK university, but Plan 4 also applies to English, Welsh or Northern Irish students who transferred to Scottish residency before their course began — sometimes referred to as “rUK-to-Scotland” transfers. EU students who started in Scotland before the 2021 tuition fee changes are also on Plan 4.
If you applied for your undergraduate loan via Student Finance England, Student Finance Wales or Student Finance NI, you are not on Plan 4; you are on Plan 1, 2 or 5 depending on start year. A SAAS postgraduate tuition fee loan is also repaid under Plan 4, on the same threshold and rate as the undergraduate loan[source]; the worked examples below use a single undergraduate balance. To check your exact plan, log in to your SAAS or SLC account, or work through what student loan plan am I on.
Plan 4 student loan threshold (2026-27)
The Plan 4 student loan threshold for 2026-27 is £33,795 annually, the highest of any UK student loan plan. The Scottish Government raised the threshold from £32,745 to £33,795 in April 2026, having already raised it from £31,395 the year before. Below the threshold you repay nothing; above it you repay 9% of the gross excess only.
| Period | 2026-27 | Previous year (2025-26) |
|---|---|---|
| Annual | £33,795 | £32,745 |
| Monthly | £2,816 | £2,728 |
| Weekly | £649 | £629 |
Plan 4 interest rate
The Plan 4 interest formula is min(RPI, BoE base rate + 1%), so whichever of RPI or the Bank of England base rate + 1% is lower in a given month sets that month's rate. The applicable Plan 4 rate is 4.1% (RPI March 2026), which runs from 1 September 2026 to 31 August 2027. Because Plan 4 carries no positive real interest margin, the loan balance grows roughly in line with inflation. In nominal terms the balance still rises each year, but in real terms (purchasing-power terms) it stays close to flat. That makes Plan 4 one of the cheapest UK student loan plans for any borrower who fully repays, and even non-repayers benefit because the eventual write-off carries little accumulated real interest cost. Plan 4 has never carried the RPI + 3% margin that can apply to Plan 2, which separates it from the English system.
Plan 4 write-off rule
Plan 4 balances are written off 30 years after the first 6 April following the end of your course. Pre-2007 Scottish loans taken out under the original Income Contingent Repayment scheme follow slightly different cancellation rules (some use 25 years, some use age 65 cutoffs). Death and permanent disability also trigger immediate cancellation. For a typical 2022 Scottish graduate the write-off date is 5 April 2053. The Scottish Government has signalled no plans to extend the 30-year period, unlike Plan 5 which uses 40 years. Check your exact date with our loan write-off checker.
Worked example: £30,000 graduate on Plan 4
A Plan 4 borrower earning a flat £30,000 gross salary for 2026-27:
- Income above threshold: £30,000 − £33,795 = £0 (income is below the £33,795 threshold)
- Annual repayment: £0
- Monthly repayment (PAYE): £0.00
Because the Plan 4 threshold is £33,795, a £30,000 earner pays nothing. This is a structural advantage of Plan 4: a Scottish graduate can earn over £33,000 and still have zero monthly student loan deduction, while an equivalent Plan 2 borrower on the same salary pays £4.61 a month and a Plan 5 borrower pays £37.50 a month. Interest still accrues on the outstanding balance, but no repayment is required and no impact on the credit file occurs. This zero-deduction band is one of the main reasons the lifetime cost of Plan 4 is so much lower than Plan 2.
Worked example: £50,000 graduate on Plan 4
A higher-earning Plan 4 borrower on £50,000:
- Income above threshold: £50,000 − £33,795 = £16,205
- Annual repayment: 9% × £16,205 = £1,458
- Monthly repayment (PAYE): £121.54
At £50,000 the borrower repays £1,458 per year, significantly less than the £1,855 a Plan 2 borrower on the same salary would pay. Combined with the low interest formula, this means most Plan 4 borrowers who sustain incomes above £45,000 will fully repay before the 30-year cutoff, and the total amount paid back in real terms is close to the original tuition + maintenance principal. Use our overpayment calculator to test if voluntary overpayment is worth it — for most Plan 4 borrowers the answer is “no, save in pension instead”.
Plan 4 vs other Plans
Plan 4 is structurally the most-friendly UK student loan plan: the highest threshold (£33,795), interest capped at the lower of RPI or BoE+1%, the same 9% rate as Plan 1/2/5, and a write-off after 30 years. Against Plan 1 (£26,900 threshold, same interest formula), Plan 4 has a £6,895 higher threshold, though Plan 1 borrowers reach write-off sooner, at 25 years. Against Plan 2 (£29,385 threshold, RPI to RPI+3%), Plan 4 is materially cheaper at any income above £30,000. Plan 4 is dramatically better again than Plan 5 (England only, £25,000 threshold), which offers a much lower threshold, comparable interest, and keeps deducting for 40 years rather than 30. Scottish students who later complete a Master's in England receive an English Postgraduate Loan on top of Plan 4, stacking the 6% PGL deduction with the Plan 4 9% deduction. See the Plan 2 vs Plan 4 comparison for a side-by-side numerical breakdown.
FAQs
What is the Plan 4 threshold for 2026-27?
The Plan 4 repayment threshold for 2026-27 is £33,795 per year, £2,816 monthly and £649 weekly. You repay 9% of gross income above this level. The Plan 4 threshold is the highest of any UK plan and rises each April in line with inflation.
Who is on Plan 4?
Plan 4 covers SAAS-funded students: Scottish-domiciled students at any UK university, plus rUK students who transferred to Scottish residency before their course began. EU students who started in Scotland before 2021 are also on Plan 4. English/Welsh/NI Student Finance borrowers are on Plan 1, 2 or 5, not Plan 4.
What is the Plan 4 interest rate in 2026?
Plan 4 interest is the lower of RPI or the Bank of England base rate plus 1%. The applicable rate is 4.1% (RPI March 2026), which runs from 1 September 2026 to 31 August 2027. Because Plan 4 never carries a positive real interest margin, balances grow roughly in line with inflation.
When is a Plan 4 loan written off?
Plan 4 balances are written off 30 years from the first April after course end. Pre-2007 Scottish loans follow slightly different cancellation rules. Death and permanent disability also trigger immediate cancellation.
Why does Plan 4 have the highest threshold?
The Scottish Government sets Plan 4 thresholds independently of Westminster and has prioritised raising them above inflation since 2018. A Scottish graduate on £30,000 pays £0 Plan 4 repayments, while an equivalent Plan 2 borrower pays £4.61 monthly.
Is Plan 4 better than Plan 2?
Yes. In 2026-27 Plan 4 has a higher threshold (£33,795 vs £29,385), lower interest (the lower of RPI or BoE+1%, against RPI to RPI+3%) and the same 30-year write-off. A graduate on £40,000 pays £46.54 a month on Plan 4 versus £79.61 a month on Plan 2. Lifetime cost is materially lower on Plan 4.
Does Plan 4 affect my credit score?
No. Plan 4 loans do not appear on UK credit files. However, mortgage affordability is reduced because lenders count the monthly deduction as a fixed outgoing, typically capping borrowing capacity by roughly 4x the annual repayment amount.
Can I pay off my Plan 4 loan early?
Yes, voluntary overpayments are accepted by SAAS via SLC at any time with no penalty. However, because Plan 4 interest is capped at the lower of RPI or Bank of England base rate + 1% and the threshold is high, overpayment rarely makes economic sense unless you are very close to full repayment.
Plan 4 optimization strategies
Plan 4 is the most-friendly UK student loan plan, so the optimization question is rarely “should I overpay?” (almost never yes) and instead “should I prefer Plan 4 if I have a choice?” English-domiciled students considering a Scottish university should factor in the Plan 4 advantage: the same career trajectory under Plan 4 vs Plan 5 saves roughly £15,000-30,000 in lifetime repayments. For existing Plan 4 borrowers, salary-sacrifice pension contributions reduce the income used for the 9% calculation, lowering monthly deduction by roughly £9 for every £100 sacrificed above the threshold. Read our pension vs overpayment guide for the full decision tree, or the thresholds guide to compare with other plans in one table.