Plan 2 Student Loans Explained
Plan 2 is the most common student loan type in England and Wales, applying to anyone who started an undergraduate course between September 2012 and July 2023.
Threshold
£28,470
per year
Repayment Rate
9%
above threshold
Interest Rate
Up to 6.2%
RPI + 0-3%
Write-off
30 years
Calculate Your Plan 2 Repayments
See your monthly payments and total repayment forecast
Who Has a Plan 2 Loan?
You have a Plan 2 loan if you:
- Started an undergraduate course in England or Wales between 1 September 2012 and 31 July 2023
- Received an Advanced Learner Loan in England from 1 August 2013
✅Historical context
This is the £9,000+ tuition fee era. Most graduates currently in the workforce with English/Welsh undergraduate loans from the 2010s have Plan 2.
How Plan 2 Repayments Work
Plan 2 repayments are automatically deducted from your salary by your employer through PAYE (Pay As You Earn), similar to tax.
Repayment Calculation
You pay 9% of everything you earn above £28,470 per year (£2,372 per month).
Example:
If you earn £40,000/year, your monthly repayment would be:
(£40,000 - £28,470) × 9% ÷ 12 = £86/month
Interest Rate — The Sliding Scale
Plan 2 has a variable interest rate based on your income. This is one of the most significant differences from other plans.
Interest Rate Bands
While studying
Still at university
Earning under £28,470
Below repayment threshold
Earning £28,470 to £52,195
Sliding scale
Earning over £52,195
Maximum interest
Current rate: With RPI at around 3.2%, the maximum Plan 2 interest rate is approximately 6.2%. This is significantly higher than a typical mortgage rate.
⚠️Plan 2 interest and statements
When Is the Loan Written Off?
Plan 2 loans are written off 30 years after the April following graduation (or leaving your course).
Good news: The majority of Plan 2 borrowers will never fully repay their loans — estimates suggest around 80% will have some amount written off after 30 years.
If you graduated in 2015, for example, your loan would be written off in April 2046.
Should You Overpay Your Plan 2 Loan?
For most Plan 2 borrowers, overpaying is NOT recommended. This is because most people will have their loan written off before they fully repay it.
✓ Consider Overpaying If:
- You earn significantly above £50k
- Small loan balance (<£30k)
- You'll clearly repay in full
- All other financial priorities met
✗ Don't Overpay If:
- Typical salary (under £50k)
- Large loan balance (£40k+)
- Not maxing pension contributions
- Have other high-interest debt
Think of It Like a Graduate Tax
Many financial experts recommend treating your Plan 2 loan like a graduate tax rather than traditional debt. Here's why:
- It's automatically deducted like tax
- You only pay when earning above the threshold
- It doesn't affect your credit score
- Most people won't repay in full
- It's written off after 30 years
So rather than stressing about a large "debt" balance, focus on the actual monthly deduction from your salary.