Most PopularUpdated 2025

Plan 2 vs Plan 5

A comprehensive comparison of England and Wales' two modern student loan plans. Understand the key differences in thresholds, interest rates, and write-off periods to see which affects you and what to expect.

Plan 2 Threshold

£28,470

£2,372/month

Plan 5 Threshold

£25,000

£2,083/month (lower)

Write-off Difference

10 years

P2: 30y, P5: 40y

Interest Gap

Up to 3%

Plan 2 adds up to RPI+3% for high earners

ℹ️Which plan do you have?

Plan 2: If you started your undergraduate course in England or Wales between September 2012 and July 2023.

Plan 5: If you started your undergraduate course in England from August 2023 onwards.

Not sure? Check your Student Loans Company account or use our plan finder tool.

Side-by-Side Comparison

Feature	Plan 2	Plan 5
Annual Threshold	£28,470	£25,000
Monthly Threshold	£2,372	£2,083
Repayment Rate	9%	9%
Interest (while studying)	RPI + 3% (≈6.2%)	RPI only (≈3.2%)
Interest (after graduation, low income)	RPI only (≈3.2%)	RPI only (≈3.2%)
Interest (high earners £52k+)	RPI + 3% (≈6.2%)	RPI only (≈3.2%)
Write-off Period	30 years	40 years
When Started	2012-2023	2023 onwards

The Threshold Difference: Plan 5 Starts Earlier

Plan 5's threshold is £3,470 lower than Plan 2. This means Plan 5 borrowers start making repayments at a lower salary.

📝 Example: £27,000 Salary

Plan 2:

Below threshold - £0 repayment

Plan 5:

Above threshold by £2,000

Monthly: £15/month

Annual: £180/year

📝 Example: £35,000 Salary

Plan 2:

Monthly: £49/month

Plan 5:

Monthly: £75/month

Difference:

Plan 5 pays £26/month more

Interest Rate Structures: The Biggest Difference

This is where Plan 2 and Plan 5 diverge most significantly. Plan 2 uses a graduated interest system that penalises high earners, while Plan 5 keeps it simple with RPI only.

⚡Plan 2 Interest: Income-Linked

While studying: RPI + 3% (currently ≈6.2%)

After graduation (earning below £28,470): RPI only (≈3.2%)

Sliding scale (£28,470 - £52,195): RPI + 0% to RPI + 3%

High earners (£52,195+): RPI + 3% (≈6.2%)

The Problem: At £60k salary, you could be paying ≈6.2% interest while making £236/month repayments. Your balance may still grow!

💰Plan 5 Interest: Simple RPI

Always: RPI only (currently ≈3.2%)

No income penalty: Your interest rate never changes based on earnings

While studying: Same rate (≈3.2%), much lower than Plan 2

The Benefit: High earners save massively on interest. At £60k with ≈3.2% interest, your £187/month payments actually reduce the balance.

Write-off Period: 30 vs 40 Years

Plan 5 extends the write-off period by 10 years compared to Plan 2. This is a significant change that affects whether you'll ever fully repay.

Plan 2: 30 Years

Written off April 2050s for most recent borrowers
More likely to hit write-off with average earnings
Shorter repayment window can mean less total paid
If earning modestly, balance likely forgiven

Plan 5: 40 Years

Won't be written off until April 2060s for new borrowers
Extra decade of potential payments
Balances the lower interest rate
High earners more likely to pay off before write-off

📝Why the Government Made This Change

The lower interest rate (RPI only) saves high earners significant money. The extended write-off period (40 years) means lower and middle earners will pay for longer, balancing the cost to the government. The net effect is more predictable and arguably fairer based on ability to pay.

Real-World Scenarios: Which Plan Costs More?

The "better" plan depends entirely on your career trajectory. Let's look at three common scenarios:

💰Scenario 1: Average Earner (£25k → £40k career)

Starting debt: £45,000

Plan 2:

Lower monthly payments early on (higher threshold)
Balance grows due to interest
Likely written off at 30 years
Total paid: ≈£18,000-£25,000

Plan 5:

Pay from day one (lower threshold)
Lower interest slows balance growth
May pay for full 40 years
Total paid: ≈£25,000-£35,000

Winner: Plan 2 (by ≈£7,000-£10,000)

📊Scenario 2: High Earner (£30k → £70k career)

Starting debt: £50,000

Plan 2:

Interest hits RPI + 3% as salary increases
Balance balloons during early career
May pay off in 15-20 years, but total is high
Total paid: ≈£65,000-£80,000

Plan 5:

Lower interest (RPI only) keeps balance manageable
Pays off in 12-15 years
Much less total interest
Total paid: ≈£52,000-£60,000

Winner: Plan 5 (by ≈£13,000-£20,000)

🎓Scenario 3: Plateaued Career (£30k throughout)

Starting debt: £40,000

Plan 2:

Minimal repayments (just above threshold)
Balance grows, almost certainly hits write-off
Total paid: ≈£12,000-£15,000

Plan 5:

Steady repayments from lower threshold
Lower interest helps, but still hits 40-year write-off
Total paid: ≈£20,000-£25,000

Winner: Plan 2 (by ≈£8,000-£10,000)

When Each Plan Works Best

Plan 5 is Better If:

You expect high earnings (£50k+) within 5-10 years
You want to avoid the RPI + 3% interest penalty
You're likely to fully repay the loan anyway
You value predictable, simple interest rates
You're a high earner concerned about balance growth
You work in finance, tech, medicine, or other high-paying sectors

Plan 2 is Better If:

You expect average or below-average graduate earnings
Your career will likely plateau at £30-40k
You value higher take-home pay early in your career
You're unlikely to fully repay (write-off probable)
You prefer the higher threshold (less deducted monthly)
You want the shorter 30-year write-off period

Key Takeaways

✓ High earners benefit from Plan 5: The RPI-only interest saves tens of thousands compared to Plan 2's RPI + 3% for high incomes.

⚠️ Average earners may prefer Plan 2: Higher threshold and shorter write-off mean less total paid over a career for those unlikely to fully repay.

💡 You can't choose your plan: It's determined by when you started university. Use calculators to model your specific situation.

📊 The difference can be £10,000-£20,000+: Over a full repayment period, plan type significantly affects total cost.