The Plan 5 student loan threshold is £25,000 and the write-off is 40 years. Here's what that costs you each month, with real worked examples.
If you started university in England in September 2023, you have just met a version of the student loan system that nobody who came before you had to deal with. It has a lower repayment threshold, a longer write-off, and it started collecting money in April 2026.
Plan 5 is not a small tweak to Plan 2. It is a structurally different deal, and the difference shows up on your payslip every single month. Here is what it costs, with the actual numbers.
You are on a Plan 5 student loan if you started an undergraduate or Advanced Learner Loan course in England on or after 1 August 2023, you repay 9% of everything you earn above £25,000 a year, and anything still outstanding 40 years after your repayments were due to start gets cancelled.
Two of those three numbers are worse than Plan 2. The third one, the interest rate, is better. More on that below.
This is the table worth screenshotting. These are the confirmed figures for the 2026/27 tax year, straight from the Student Loans Company terms and conditions updated on 6 April 2026.
| Plan | Who it covers | Annual threshold | Monthly | Weekly | Rate |
|---|---|---|---|---|---|
| Plan 1 | Course started before 1 Sept 2012 | £26,900 | £2,241 | £517 | 9% |
| Plan 2 | Course started 1 Sept 2012 to 31 July 2023 | £29,385 | £2,448 | £565 | 9% |
| Plan 5 | Course started on or after 1 Aug 2023 | £25,000 | £2,083 | £480 | 9% |
| Postgraduate | Master’s from Aug 2016, Doctoral from Aug 2018 | £21,000 | £1,750 | £403 | 6% |
The gap that matters is the one between Plan 5 and Plan 2: £4,385 a year of income that a Plan 2 graduate keeps and a Plan 5 graduate does not.
At 9%, that gap alone is worth £394.65 a year, or about £32.89 a month, for anyone earning above both thresholds. Same salary, same job, same desk. Different course start date.
Your employer treats the Plan 5 student loan deduction like income tax and National Insurance: it comes out of gross pay, before it ever reaches your bank account, and it appears as its own line on the payslip.
Worked example: a graduate on £28,000, paid monthly, tax code 1257L, no pension.
Now run the same person on Plan 2. Their threshold is £2,448 a month, and they earn £2,333.33. They are under it. Their student loan deduction is £0.
That is the whole story of Plan 5 in one example. At £28,000, a 2022 starter pays nothing and a 2023 starter pays £270 a year.
Push the salary up to £33,000 and both are paying, but not equally:
The Plan 5 borrower is down £32.85 every month, roughly £394 a year, for as long as they stay above the threshold.
This is the part I would flag hardest, because it hits people who do not think of themselves as graduates with a repayment problem at all.
Student loan deductions are calculated per pay period, not per year. The Student Loans Company spells this out: repayments are worked out on individual pay periods, so if your income varies, you will pay back more in some periods than others.
In practice that means the weekly threshold of £480 and the monthly threshold of £2,083 are hard lines, applied in isolation.
Say you are on £11 an hour doing bar shifts while you look for a graduate job. Most weeks you do 30 hours, so £330, well under £480, and nothing comes out. Then a festival weekend lands and you do 48 hours: £528. You are £48 over the weekly threshold, so £4.32 comes out that week for your student loan. Do that six times across the summer and you have paid roughly £26 towards a loan on an annual income of maybe £18,000, well under £25,000.
The same thing happens to anyone in retail or hospitality with a December peak, to NHS staff picking up bank shifts, and to anyone getting a one-off bonus.
The good news: you can claim it back. If your total income for the tax year came in under £25,000, you are entitled to a refund of every Plan 5 deduction taken. The bad news: it is not automatic. You have to request it through your repayment account at gov.uk/sign-in-to-manage-your-student-loan-balance, or via the government’s refund service.
Most people never do, because most people never notice the line on the payslip in the first place.
Two things genuinely improved, and it is worth being fair about them.
Interest is RPI only. Plan 2 charges RPI plus up to 3% depending on your income, and RPI plus 3% flat while you are still studying. Plan 5 is normally set at RPI only, full stop, from day one. Your balance broadly keeps pace with inflation rather than sprinting ahead of it in real terms. On a £50,000 balance in a year when RPI is 3% and the Plan 2 rate is 6%, that is a £1,500 difference in what gets added.
There is also an interest rate cap. The Department for Education monitors commercial bank rates monthly and applies a temporary cap if the RPI-linked rate would put you at a disadvantage.
You still cannot really “lose” more than you earn. The 9% applies only above the threshold, it stops the moment your income drops below it, and it restarts automatically when you go back over. Nobody chases you for a fixed monthly amount.
The write-off is 40 years, not 30. Plan 2 balances are cancelled 30 years after the April you became due to repay. Plan 5 is 40 years. For a graduate who starts repaying at 22, Plan 2 clears at 52 and Plan 5 clears at 62.
Combine the lower threshold with the longer term and the design intent is obvious: a much larger share of Plan 5 borrowers will repay their loan in full, and the ones who do not will still have paid for a decade longer.
The threshold is frozen until 2027. The £25,000 figure is fixed until April 2027, when it starts rising with RPI. Every year of freeze while wages rise means more of your pay sits above the line. This is the same quiet mechanism as the frozen £12,570 personal allowance, and it works the same way: you pay more without any rate ever changing.
Do not guess from your graduation year. Your plan follows your course start date.
If you have both a Plan 5 loan and a Postgraduate Loan, you repay both at once: 9% above £2,083 a month for Plan 5 and 6% above £1,750 a month for the postgraduate loan. Those stack.
April 2026 was the first month any Plan 5 repayments could legally be collected. The regulations say no Plan 5 borrower is expected to repay before April 2026, even if they left their course early. So if a student loan line appeared on your payslip this spring for the first time, that is why, and it is correct.
What did not change: the threshold. It is still £25,000, still frozen until April 2027. The rate is still 9%. The write-off is still 40 years. Nothing in the 2026/27 tax year altered the deal.
What did change alongside it: the Plan 1 threshold moved to £26,900 and the Plan 2 threshold to £29,385, both up on last year. Watching the Plan 2 threshold climb while yours stays pinned at £25,000 is a fair summary of what Plan 5 is.
If you want to see exactly what your student loan deduction does to your take-home each month, at your hourly rate or salary, the NetPay app works it out alongside income tax, National Insurance, and pension. Free to download.
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For the 2026/27 tax year the Plan 5 threshold is £25,000 a year, £2,083 a month, or £480 a week. You repay 9% of whatever you earn above it. The threshold is fixed at £25,000 until April 2027, after which it rises in line with RPI.
If you started an undergraduate course in England on or after 1 August 2023, you are on Plan 5. If you started between 1 September 2012 and 31 July 2023, you are on Plan 2. Your repayment plan follows your course start date, not your graduation date. You can check which plan you are on by signing in at gov.uk/sign-in-to-manage-your-student-loan-balance.
Employers work out student loan deductions per pay period, not per year. If you earn more than £2,083 in one month or £480 in one week, perhaps from overtime or a bonus, a deduction is taken for that period even if your annual pay ends up below £25,000. You can claim it back after the tax year ends, but the refund is not automatic.
For most people, no. Plan 5 interest is set at RPI only, so the balance broadly tracks inflation rather than growing in real terms, and anything left after 40 years is written off. Voluntary repayments are also non-refundable. Paying extra only makes sense if you are on a high enough salary to genuinely clear the balance before the 40 years are up.
Want to see your actual take-home pay?
NetPay UK works out your real net pay after tax, NI, pension and salary sacrifice, for hourly, shift and variable-income workers. Free to download.
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A note on financial advice: NetPay UK calculates take-home pay based on official HMRC tax rules. This article reflects rules in force at the time of publication (22 July 2026). Tax rules change. For complex situations, consult a qualified UK accountant or visit gov.uk/income-tax.
