Plan 2 Threshold Freeze: What It Means For You
The UK Government announced that England’s Plan 2 threshold will stay at £29,385 a year for three years from April 2027. Welsh repayment terms are a devolved matter, so check the Welsh Government’s current position.
ℹ️Who the announced policy covers
The UK Budget announcement concerns borrowers in England. The Senedd committee record of 30 September 2026 said a final Welsh decision had not been made. A later final decision was not established in our 6 November 2026 source check; use the linked Welsh record and current Welsh guidance before assuming the English freeze applies.
How the announced freeze works (2026/27)
Plan 2 repayments are 9% of earnings above the annual repayment threshold. The current threshold is £29,385. Under the England policy, it remains at that amount from April 2027 for three years, through the 2029/30 tax year. After that period, the government says it will increase annually by inflation.
A threshold that does not rise with pay can make a borrower’s repayment increase as earnings rise. It does not change the repayment percentage, add to the loan balance, or establish how much an individual will pay over the whole repayment term.
A one-year illustration
This comparison holds salary at £35,000 and shows what the annual repayment would be at the announced fixed threshold and at a hypothetical threshold 3% higher. The higher threshold is an illustration, not a forecast of inflation or a government decision.
| Scenario | Threshold | Estimated annual repayment |
|---|---|---|
| Announced fixed threshold | £29,385 | £505 |
| Hypothetical 3% higher threshold | £30,267 | £426 |
In this illustration, the difference is about £79 over a year. Payroll deductions use pay-period thresholds and rounding, so actual deductions can differ from an annual estimate.
What the policy does not tell you
- It does not determine your personal repayments, which depend on your earnings and applicable plan rules.
- It does not show whether you will repay in full or have a balance written off.
- It does not make voluntary overpayments worthwhile or unhelpful for every borrower.
Use the Plan 2 calculator to model assumptions, and read the overpayment guide before comparing a voluntary payment.
💡Welsh borrowers
Repayment terms for Welsh borrowers are within the Welsh Government’s powers. The cited Senedd record said discussions were ongoing and no final decision had been taken at that time. Do not assume the England freeze applies automatically in Wales; check the latest Welsh Government or Student Finance Wales guidance.
Key points
The England announcement keeps the Plan 2 threshold at £29,385 for three years from April 2027.
A frozen threshold can increase repayments when earnings rise, but does not predict lifetime cost.
Welsh repayment terms are devolved; verify the current Welsh decision separately.
Plan 2 Threshold Freeze: Common Questions
- Is the Plan 2 threshold being frozen?
- The UK Government announced that the Plan 2 threshold will remain at £29,385 a year for three years from April 2027 for borrowers in England. Plan 2 repayment terms are devolved in Wales; check Welsh Government guidance for the decision that applies to Welsh borrowers.
- How could a threshold freeze affect repayments?
- If your pay rises while the threshold stays fixed, more of your pay may be above it. For example, on a £35,000 salary, a hypothetical 3% rise in the threshold would reduce the annual Plan 2 repayment by about £79 compared with the announced fixed threshold. This is a one-year illustration, not a forecast.
- Should I overpay because the threshold is frozen?
- A threshold policy alone does not show whether a voluntary overpayment will reduce your total repayments. That depends on your balance, income over time, future terms and whether you would otherwise repay in full. Compare scenarios and consider whether you need the money for other priorities.