Plan 2 vs Plan 4
Compare England/Wales Plan 2 with Scotland's Plan 4 — thresholds, interest, and regional differences explained in plain language.
Plan 2 threshold
£28,470
Monthly: £2,372
Plan 4 threshold
£32,745
Monthly: £2,728
Interest style
RPI vs Base + 1%
Plan 2 income-linked, Plan 4 capped
Write-off period
30 yrs both
30 / 30
Quick comparison
| Feature | Plan 2 — England/Wales | Plan 4 — Scotland |
|---|---|---|
| Annual threshold | £28,470 | £32,745 |
| Monthly threshold | £2,372 | £2,728 |
| Repayment rate | 9% | 9% |
| Interest style | RPI (sliding up to RPI+3%) | Lower of RPI or Bank Rate + 1% |
| Write-off | 30 years | 30 years |
| Applies to | 2012–2023 England/Wales starters | All Scottish students |
Threshold advantage: Plan 4 starts later
Plan 4's threshold is £4,275 higher than Plan 2, meaning Scottish borrowers don't start repaying until they earn more.
📝 Example: £35,000 salary
Plan 2:
Monthly: £49/month
Plan 4:
Monthly: £17/month
Difference:
Plan 4 keeps £-32 /month more
Interest rates: different structures
The interest mechanics are a key differentiator — Plan 2 can penalise high earners via RPI+3%, while Plan 4 uses a capped rate.
⚡Plan 2 interest: income-linked
While studying: RPI + 3% (≈6.2%)
Below threshold: RPI only (≈3.2%)
High earners: sliding up to RPI + 3%
Why it matters: An income jump can raise your interest rate and cause balances to grow despite repayments.
💰Plan 4 interest: capped rate
Always: Lower of RPI or Bank Rate + 1% (≈3.2% today)
Key benefit: Protected from runaway interest during high RPI.
Why it matters: High earners keep interest reasonable making repayments more effective at reducing balances.
Tuition fee context matters
Scottish students studying in Scotland typically have tuition fees paid by SAAS, meaning most Plan 4 borrowers only took out maintenance loans.
English/Welsh students on Plan 2 borrowed both tuition fees (up to £9,250/year) and maintenance, resulting in much larger loan balances, often £40k-£60k vs £10k-£25k for Scottish students.
Important: While Plan 4 has better terms, the typical Scottish borrower also has a much smaller balance to repay. Direct plan-to-plan comparisons can be misleading without considering this context.
Geographic rules explained
Your plan is determined by where you studied, not your nationality or current location:
- Studied in Scotland? You're on Plan 4, even if you now work in London
- Studied in England/Wales 2012-2023? You're on Plan 2, even if you're Scottish
- Work location doesn't matter: HMRC tracks your plan type via National Insurance records
If you work abroad, see our international repayment guides.
Which plan is more favourable?
Plan 4 wins if:
- You value a higher threshold (Plan 4: £32,745)
- You expect to be a mid-to-high earner (Plan 4 interest capped)
- You had free tuition (smaller initial balance)
- You prefer predictable interest rates
Watch out if you're on Plan 2:
- You pay earlier with Plan 2 due to lower threshold
- Plan 2 interest can increase with your income (RPI + up to 3%)
- Higher tuition + maintenance debts can increase total paid
⚠️Plan 2: RPI plus up to 3%
You can't choose your plan — it's assigned by where and when you studied — but knowing these differences helps you plan effectively.
Model your scenario
Use our calculators to compare Plan 2 and Plan 4 with your actual debt, salary and career assumptions.