Plan 5 Student Loans
Complete guide to the new post-2023 student loans in England and Wales
Plan 5 Loan at a Glance
Who has Plan 5?
Students who started university in England or Wales from September 2023 onwards.
Repayment Threshold
£25,000 per year (£2,083 monthly, £480 weekly)
Repayment Rate
9% of income above the threshold
Interest Rate
RPI only (lower than Plan 2)
No additional percentage added to RPI
Written Off
40 years after the April after graduation (longer than Plan 2)
When Repayments Start
The April after leaving your course, and only when income is above the threshold
How Plan 5 Student Loans Work
Plan 5 student loans were introduced in September 2023 as part of reforms to the student finance system in England. These loans cover both tuition fees (up to £9,250 per year) and maintenance (living costs) for eligible students.
Key Features of Plan 5 Loans
Plan 5 represents significant changes from the previous Plan 2 system, including:
- A lower repayment threshold (£25,000 instead of £27,295)
- Lower interest rates (RPI only, no added percentage)
- Longer repayment period before write-off (40 years instead of 30)
- Still income-contingent, with automatic salary deductions through PAYE
Calculating Plan 5 Repayments
You repay 9% of your income above the threshold of £25,000 per year. For example:
Annual salary: £32,000
- Income above threshold: £32,000 - £25,000 = £7,000
- 9% of £7,000 = £630 per year
- Monthly repayment: £52.50
Plan 5 Interest Rates
One of the main benefits of Plan 5 compared to Plan 2 is the lower interest rate:
| Circumstance | Interest Rate |
|---|---|
| While studying | RPI only |
| After graduation | RPI only |
Current RPI (Retail Price Index) is subject to change. As of 2023, it stands at approximately 2.6%.
Long-Term Impact of Plan 5
The combination of a lower threshold, lower interest rate, and longer repayment period means:
- Higher earners may pay less overall compared to Plan 2 due to lower interest accumulation
- Lower and middle earners will pay more per month and for a longer period
- Fewer borrowers will have their loans written off before full repayment
- The system is generally more financially sustainable for the government
How Plan 5 Compares to Other Loan Plans
| Feature | Plan 2 | Plan 5 | Postgraduate |
|---|---|---|---|
| Who has it | 2012-2023 students | Post-2023 students | Master's & PhD students |
| Repayment Threshold | £27,295 | £25,000 | £21,000 |
| Interest Rate | RPI to RPI + 3% | RPI only | RPI + 3% |
| Written Off After | 30 years | 40 years | 30 years |
Frequently Asked Questions
Are Plan 5 loans better or worse than Plan 2?
It depends on your future earnings. High earners (£50,000+) may benefit from Plan 5 due to lower interest rates, potentially paying less overall. However, middle and lower earners will likely pay more under Plan 5 due to the lower repayment threshold and longer repayment period. Use our Plan 2 vs Plan 5 comparison calculator to see which would be better for your circumstances.
Can I pay off my Plan 5 loan early?
Yes, you can make voluntary repayments at any time. With Plan 5's lower interest rate, early repayment might make more financial sense for high earners compared to Plan 2. However, for many graduates, it may still not be advantageous to overpay, especially if you're unlikely to repay the full amount before the 40-year write-off. Use our overpayment calculator to see if this makes sense for you.
If I started before 2023 but haven't graduated yet, which plan will I be on?
If you started your course before September 2023, you will remain on Plan 2, even if you haven't graduated yet. Plan 5 only applies to new students who started their course from September 2023 onwards.
Calculate Your Plan 5 Repayments
Use our calculator to see exactly how your Plan 5 loan will affect your monthly budget