Plan 5 Student Loan Explained
Plan 5 is the student loan repayment plan for students in England who started an undergraduate course from September 2023 onwards. Its defining features are a lower repayment threshold of £25,000 (for 2025/26), the usual 9% repayment rate on income above that threshold, RPI-linked interest, and a much longer write-off term of 40 years. The lower threshold and longer term mean many Plan 5 borrowers will repay for more of their working lives, and a large share are projected never to clear the balance before it is written off.
If you started university in England in or after autumn 2023, this is almost certainly your plan. Here is how it works and how it differs from the older plans.
At a glance
- Who's on it
- English students starting from September 2023
Key Takeaways
- Plan 5 applies to English undergraduates who started their course from September 2023, and repayment begins the April after you finish.
- The repayment threshold is £25,000 for 2025/26 — lower than Plan 2 — with the usual 9% rate on income above it.
- Plan 5 loans are written off 40 years after you become liable, a decade longer than Plan 2's 30-year term.
- Interest is set at RPI for most borrowers, without the income-linked margin that Plan 2 applies.
Who is on Plan 5?
You are on Plan 5 if you are a student from England who started an eligible undergraduate or Advanced Learner Loan course on or after 1 August 2023 (in practice, the September 2023 intake and later). Students who started before then are on Plan 1 or Plan 2, covered in Plan 1 vs Plan 2 student loan. Scottish students are on Plan 4, and Postgraduate Loans have their own separate rules.
If you hold an earlier undergraduate loan as well as a newer one, you can be on more than one plan at once. The definitive way to check is to log into your account at gov.uk, and your plan should also appear on your payslip.
The £25,000 threshold
Plan 5's repayment threshold is £25,000 a year for 2025/26 (always confirm the current figure at gov.uk). You repay 9% of everything you earn above £25,000, and nothing on income below it.
This threshold is notably lower than Plan 2's £28,470, which means Plan 5 borrowers start repaying at a lower salary and repay slightly more at any given income. For example, someone earning £31,000 repays 9% of £6,000 — about £540 a year, or £45 a month. Someone earning exactly £25,000 or less repays nothing. You can see how this scales across salaries using the calculator in our student loan repayment explained guide.
The threshold for Plan 5 has also been held rather than rising quickly, which in practice pulls more graduates into repayment over time as wages grow.
The 40-year write-off
The biggest structural change with Plan 5 is the 40-year write-off term, up from 30 years on Plan 2. Your loan is written off 40 years after the April you first become liable to repay, and any balance remaining at that point is cancelled in full, with nothing to pay.
A longer term means most Plan 5 borrowers will make repayments for a larger part of their working lives. Combined with the lower threshold, the government's own modelling expects a higher proportion of Plan 5 borrowers to repay their loans in full than under Plan 2 — but many still will not, especially those with lower or interrupted earnings. See when is a student loan written off for how the terms compare across plans.
Interest on Plan 5
Plan 5 interest is set at RPI for most borrowers. Unlike Plan 2, it does not add an income-linked margin on top of RPI, so higher earners on Plan 5 are not charged the extra percentage that higher-earning Plan 2 borrowers face while studying and beyond.
As with every plan, though, the interest rate matters far less than it appears. Because your repayment is fixed at 9% of income above the threshold, the rate does not change your monthly deduction — it only affects your balance, and therefore only matters if you are on course to repay in full before the 40 years are up. We cover this in student loan interest rates explained.
Should Plan 5 borrowers overpay?
For most Plan 5 borrowers, overpaying is not worthwhile. With a 40-year term and a large share of borrowers not repaying in full, voluntary overpayments often go towards a balance that would have been written off anyway. Your spare money will usually do more in a pension, an ISA, an emergency fund or a mortgage deposit. We work through the decision in should I pay off my student loan early.
And remember Plan 5, like every plan, is not on your credit file, so it does not affect your credit score — though repayments do reduce mortgage affordability, as explained in does a student loan affect your mortgage.
Frequently asked questions
Am I on Plan 5?
You are on Plan 5 if you are an English student who started an eligible undergraduate course from September 2023 onwards. Students who started earlier are on Plan 1 or Plan 2, and Scottish students are on Plan 4. Confirm your plan by logging in at gov.uk or checking your payslip.
When do I start repaying a Plan 5 loan?
You start repaying in the April after you finish or leave your course, and only once you earn above the £25,000 threshold. Below that income you repay nothing. Repayments are then collected automatically through PAYE if you are employed.
Why is the Plan 5 threshold lower than Plan 2?
The Plan 5 threshold of £25,000 was set lower than Plan 2's, and combined with a 40-year term this is designed so that graduates repay over more of their working lives. In practice it means Plan 5 borrowers begin repaying at a lower salary and repay slightly more at any given income.
Is a Plan 5 student loan really written off after 40 years?
Yes. Plan 5 loans are written off 40 years after you become liable to repay, and any balance left at that point is cancelled in full at no cost to you. Loans are also written off on death. It is a longer term than Plan 2's 30 years.
General information only, not financial advice. Check your plan type and balance at gov.uk.
