Plan 1 vs Plan 2 Student Loan: What's The Difference?
Plan 1 and Plan 2 are the two most common student loan repayment plans in England and Wales, and the differences matter. Plan 1 has a lower repayment threshold (£26,065 for 2025/26) but is written off sooner, at around 25 years, and charges lower interest. Plan 2 has a higher threshold (£28,470 for 2025/26), is written off after 30 years, and can charge higher, income-linked interest. Which one you are on depends chiefly on when your course started, not on how much you borrowed.
Getting your plan right matters because it decides when you start repaying, how much comes out of your salary, and when the balance is finally cancelled. This guide explains the differences and how to check which plan applies to you.
At a glance
- Plan 1 threshold (2025/26)
- £26,065
Key Takeaways
- Both plans deduct 9% of your income above their threshold, but the thresholds differ — £26,065 for Plan 1 and £28,470 for Plan 2 in 2025/26.
- Plan 1 is generally written off after around 25 years; Plan 2 after 30 years.
- Plan 1 interest is typically lower and simpler, while Plan 2 interest is RPI-linked and can rise with your income.
- Your plan is set mainly by when your course started, not what you studied or how much you borrowed — check it at gov.uk.
Which plan am I on?
Your plan type generally comes down to when and where you started your course:
- Plan 1 broadly covers students from England and Wales who started an undergraduate course before September 2012, plus certain Northern Ireland loans.
- Plan 2 broadly covers students from England and Wales who started an undergraduate course between September 2012 and July 2023.
- Students in England starting from September 2023 are on Plan 5, covered separately in Plan 5 student loan explained.
- Scottish students are usually on Plan 4.
If you studied more than once, you can hold more than one plan at a time. The quickest way to be certain is to log into your account at gov.uk, and your correct plan should also show on your payslip. Our student loan repayment explained guide covers how these deductions appear.
Thresholds and repayments
Both plans use the same headline rule: you repay 9% of your income above the threshold, and nothing below it. The difference is where the threshold sits. For 2025/26 (check gov.uk for current figures):
- Plan 1: £26,065
- Plan 2: £28,470
The higher Plan 2 threshold means Plan 2 borrowers start repaying at a slightly higher income and repay a little less at any given salary. For example, at £34,000: a Plan 1 borrower repays 9% of £7,935 (about £714 a year), while a Plan 2 borrower repays 9% of £5,530 (about £498 a year). The gap is simply the difference in thresholds. You can see how this plays out across salaries using the calculator in our repayment guide.
Interest: the biggest difference
The plans diverge most on interest.
- Plan 1 interest is generally lower and simpler, typically capped at a rate linked to the Bank of England base rate or RPI, whichever is lower. In practice it tends to be modest.
- Plan 2 interest is RPI-linked and can be higher, and while studying and for higher earners it can be RPI plus an additional percentage, tapering down for lower earners.
That said, for both plans the interest rate is often less important than it looks, because your repayments are fixed by your income, not your balance. Interest only really matters if you are on track to repay the loan in full before write-off. We explain this in student loan interest rates explained.
Write-off: 25 years vs 30 years
Plan 1 loans are generally written off after around 25 years (some older loans are cancelled at a set age instead), while Plan 2 loans are written off 30 years after you first became liable to repay. Whatever balance remains at that point is cancelled in full, with nothing to pay. Because Plan 1 is written off sooner, its borrowers reach that cancellation point five years earlier. See when is a student loan written off for the full breakdown.
Does the plan change whether I should overpay?
The plan affects the sums but not the core logic. On both plans, overpaying only makes sense if you are clearly going to repay the loan in full before write-off. Because Plan 2 has a higher balance for most graduates (post-2012 tuition fees were much larger) and 30-year term, many Plan 2 borrowers never repay in full, so overpaying is often not worthwhile. We cover the decision in should I pay off my student loan early.
Neither plan appears on your credit file, so neither directly affects your credit score — though repayments do reduce mortgage affordability, as explained in does a student loan affect your mortgage.
Frequently asked questions
How do I find out whether I'm on Plan 1 or Plan 2?
Log into your student loan account at gov.uk, where your plan type is shown clearly. Your payslip should also display your plan. As a rule of thumb, English and Welsh undergraduates who started before September 2012 are usually Plan 1, and those who started from September 2012 to July 2023 are usually Plan 2.
Can I be on both Plan 1 and Plan 2 at the same time?
Yes. If you studied on separate courses at different times, you can hold both plans. Repayments are worked out so you do not pay more than 9% of your income above the lower threshold overall, but the way the two are combined can be complex — check the detail at gov.uk.
Is Plan 1 or Plan 2 better?
Neither is "better" — your plan is set by when you studied, not something you choose. Plan 1 has a lower threshold but lower interest and an earlier write-off; Plan 2 has a higher threshold but potentially higher interest and a longer term. What matters for you is your income and balance.
Do Plan 1 and Plan 2 both come out of my wages automatically?
Yes. If you are employed, repayments for either plan are deducted automatically through PAYE alongside your tax and National Insurance. If you are self-employed, they are collected via Self Assessment. Just make sure your payslip shows the correct plan so you are not over- or under-paying.
General information only, not financial advice. Check your plan type and balance at gov.uk.
