Plan 4 Student Loans Explained
Plan 4 is for Scottish students who received loans from the Student Awards Agency Scotland (SAAS) from September 1998 onwards. It features the highest repayment threshold of all plans.
Threshold
£32,745
per year
Repayment Rate
9%
above threshold
Interest Rate
3.2%
current rate
Write-off
30 years
Calculate Your Plan 4 Repayments
See your monthly payments with Scotland's higher threshold
Who Has a Plan 4 Loan?
You have a Plan 4 loan if you:
- Received funding from the Student Awards Agency Scotland (SAAS)
- Started an undergraduate or postgraduate course in Scotland from 1 September 1998
📝Note
Even if you're Scottish but studied in England and got an English loan, you'd be on Plan 1 or Plan 2, not Plan 4. Plan 4 is specifically for SAAS-funded students.
Why Plan 4 Is More Favourable
Plan 4 is often considered the best student loan deal in the UK. Here's why:
🎯 Highest Threshold
At £32,745/year, Plan 4 has the highest threshold — meaning you keep more of your salary before repayments start.
📉 Lower Interest
Like Plan 1, interest is the lower of RPI or Base Rate + 1%, typically around 3.2% — much better than Plan 2's 6.2%.
🎓 Lower Tuition Fees
Scottish students pay no tuition fees in Scotland, so debt is typically much lower (maintenance loan only).
⏰ Same Write-off
30-year write-off is the same as Plan 2, giving plenty of time for the loan to be cleared or forgiven.
How Plan 4 Repayments Work
Even if you studied in Scotland, repayments work the same way through the UK tax system. Your employer deducts repayments automatically.
Repayment Calculation
You pay 9% of everything you earn above £32,745 per year.
Example:
If you earn £40,000/year, your monthly repayment would be:
(£40,000 - £32,745) × 9% ÷ 12 = £54/month
Compare: A Plan 2 borrower on the same salary would pay £86/month
Interest Rate
Plan 4 uses the same interest formula as Plan 1:
Interest is the lower of:
- Retail Price Index (RPI)
- Bank of England base rate + 1%
Current Plan 4 interest rate: approximately 3.2%
This is significantly lower than Plan 2's maximum of RPI + 3% (around 6.2%), making Plan 4 loans much less likely to grow faster than you can pay them off.
When Is the Loan Written Off?
Plan 4 loans are written off 30 years after the April following when you became eligible to repay (usually April after graduation).
Historical note: Plan 4 was introduced in 2021 to replace the old Plan 1 classification for Scottish loans. If you had a Scottish loan before April 2021, it was automatically moved to Plan 4.
Should You Overpay Your Plan 4 Loan?
Plan 4 loans are a mixed bag for overpayment decisions. The lower interest makes overpaying more attractive than Plan 2, but you should still do the maths.
✓ Consider Overpaying If:
- You'll clearly repay in full
- Small loan balance (maintenance only)
- High salary and want to clear it
- All other priorities handled
✗ Maybe Don't If:
- Not maximising pension
- No emergency fund
- Other higher-interest debt
- Loan will be written off anyway