UK Plan 5 Student Loan 2026/27: Courses From August 2023
Plan 5 student loan 2026/27: 9% of income over £25,000, RPI interest, 40-year write-off, and how it compares with Plans 1, 2, 4 and Postgraduate.
2026/27 student loan plan comparison
| Plan | Threshold | Rate | Write-off | Interest (Sept 2026 to Aug 2027) | Who |
|---|---|---|---|---|---|
| Plan 1 | £26,900 | 9% | 25 yr (age 65 if first loan paid before 1 Sept 2006) | Lower of RPI or Bank Base Rate + 1% (4.1%) | Started before 1 Sept 2012 via Student Finance England or Wales; all Student Finance NI borrowers |
| Plan 2 | £29,385 | 9% | 30 yr | RPI to RPI + 3% by income, capped at 6% | England starters 1 Sept 2012 to 31 July 2023; Wales starters from 1 Sept 2012 |
| Plan 4 | £33,795 | 9% | 30 yr (first loan from 1 Aug 2007) | Lower of RPI or Bank Base Rate + 1% (4.1%) | Student Awards Agency Scotland borrowers |
| Plan 5 | £25,000 | 9% | 40 yr | RPI (4.1%), subject to a market-rate cap | Student Finance England starters from 1 Aug 2023 (undergraduate, PGCE) |
| Postgrad | £21,000 | 6% | 30 yr (England and Wales) | RPI + 3%, capped at 6% | Master's or doctoral loans from Student Finance England or Wales |
Thresholds and repayment rates: GOV.UK, how much you repay. Write-off periods: GOV.UK, when your loan is written off. Interest rates apply from 1 September 2026 to 31 August 2027: DfE announcement, 10 August 2026. Compared with Plan 2, Plan 5 starts repayments at a lower income and runs for ten years longer, but its interest is normally RPI only rather than up to RPI + 3%.
Related guides + calculators
- Student loan plans explained
- Student loan calculator
- Salary calculator (Plan 5 deduction)
- Two-jobs calc (Plan 5 across employments)
- Pension contribution calculator
- Salary sacrifice pension guide
- 60% marginal rate (Personal Allowance taper)
- SA filing for self-employed Plan 5
- Class 2 + Class 4 NI self-employed
- Tax-free allowances stack
Frequently asked questions
What is a Plan 5 student loan and who is on it?
You are on Plan 5 if you applied to Student Finance England and started an undergraduate course or a PGCE on or after 1 August 2023 (GOV.UK). Welsh borrowers stay on Plan 2, Scottish on Plan 4 and Northern Irish on Plan 1. Master's and doctoral loans are on the separate Postgraduate Loan plan. In 2026/27 you repay 9% of income over £25,000 a year (GOV.UK). Example: on £30,000 that is 9% of £5,000 = £450 a year; the same salary on Plan 2 would repay about £55.
How is Plan 5 different from Plan 2?
Three differences, all from GOV.UK and the write-off rules: (1) threshold - £25,000 against £29,385 for Plan 2 in 2026/27, so repayments begin £4,385 lower down the income scale; (2) write-off - 40 years after the April you were first due to repay, against 30 for Plan 2; (3) interest - Plan 5 is normally RPI only, while Plan 2 runs from RPI to RPI + 3% depending on income (capped at 6% from 1 September 2026 to 31 August 2027). The repayment rate is 9% on both.
How is Plan 5 interest calculated?
Interest is charged from the first payment to you or your university until the loan is repaid or cancelled, and is added monthly. It is usually set on 1 September from the previous March's RPI, and is normally RPI only (GOV.UK). For 1 September 2026 to 31 August 2027 the rate is RPI, 4.1% (DfE announcement, 10 August 2026). If comparable commercial rates fall below it, DfE applies a temporary cap: when March 2023 RPI was 13.5%, the Plan 5 rate was capped at 7.3% from 1 September to 30 November 2023. Interest is still added when your income is below the threshold.
When does a Plan 5 student loan get written off?
"Plan 5 loans are written off 40 years after the April you were first due to repay" (GOV.UK). Example: a September 2023 starter on a four-year course who leaves in summer 2027 is first due to repay in April 2028, so any balance is written off in April 2068. SLC also cancels the loan if the borrower dies (evidence such as a death certificate is needed), and may cancel it if you can no longer work because of illness or disability and claim certain disability benefits. DfE's terms warn that cancellation may not apply if you are in breach of your repayment obligations (terms and conditions 2026-27).
Should I make extra repayments on a Plan 5 loan?
You can, and there is no penalty, but extra repayments cannot be refunded. GOV.UK warns: "You might not benefit from making extra repayments because your loan will be written off at the end of the loan term" and suggests speaking to a financial adviser if unsure (GOV.UK). How much you repay each year depends only on income, not on the balance (GOV.UK), so overpaying only saves money if you would otherwise clear the loan before the 40-year write-off. Because Plan 5 interest is normally RPI, the balance broadly tracks RPI inflation rather than growing faster than it.
What is the combined marginal rate for a Plan 5 employee?
Using 2026/27 rates for England, Wales and Northern Ireland: basic-rate Income Tax 20% + employee NI 8% + Plan 5 9% = 37% on each pound over £25,000; higher rate 40% + 2% + 9% = 51%; additional rate 45% + 2% + 9% = 56%. Scottish bands differ. A £5,000 rise inside the basic-rate band leaves £3,150 after these deductions, against £3,600 without a loan. Pay given up under genuine salary sacrifice is not Class 1 earnings, and HMRC's rule is that only Class 1 earnings attract student loan deductions (CSLM17055).
How does Plan 5 work for the self-employed and for dividend or rental income?
If you file Self Assessment, HMRC works out repayments on your income for the whole year and you pay with your tax, less anything already deducted through PAYE (GOV.UK). Total income for this purpose includes employment income, self-employed profits, property income and "unearned income in excess of £2,000" (HMRC). Unearned income such as dividends counts only if it exceeds £2,000, and then in full, not just the excess (CSLM16035). A sole trader with profits between £25,000 and £50,270 faces 20% Income Tax + 6% Class 4 NI + 9% Plan 5 = 35% on each extra pound.
What if I have Plan 5 and a Postgraduate Loan?
You repay both at the same time: 6% of income over the Postgraduate Loan threshold (£21,000) and 9% of income over the lowest threshold of your other plans (GOV.UK). On £35,000: Plan 5 9% × £10,000 = £900, plus Postgraduate 6% × £14,000 = £840, a total of £1,740 a year. If you hold more than one undergraduate plan, you repay 9% over the lowest of their thresholds in a single deduction. Postgraduate Loans from England or Wales are written off 30 years after the April you were first due to repay.
How does moving abroad affect Plan 5 repayments?
Moving abroad does not cancel the loan. You must tell the Student Loans Company if you leave the UK for more than 3 months, and you repay SLC directly (GOV.UK). You still repay 9% of income over a threshold, but SLC applies a threshold for each country, which can differ from the UK one because of living costs. If you do not give SLC details of your income, "you may be charged a fixed amount depending on where you live, which may be higher than the repayment amount due based on your actual income" (DfE terms 2026-27). Not updating your details can also build up arrears, repayable on top of regular repayments. The 40-year write-off still applies.
Do Plan 5 repayments use my combined income from two jobs?
Through PAYE, no: each employer looks only at its own pay, and "You'll only make repayments from jobs where you're paid over the threshold for your plan type, not your combined income" (GOV.UK). The per-period thresholds for 2026/27 are £2,083 a month or £480 a week. If you file Self Assessment, though, income from all employments is combined for the year and any shortfall is collected through your return (HMRC). A one-off bonus can trigger a deduction in that pay period even if your annual pay is below £25,000.
When do I start repaying a Plan 5 loan?
"The earliest you'll start repaying is the April after you leave your course"; for some part-time courses it is the April four years after the course started (GOV.UK). DfE's terms add that Plan 5 repayments are not expected "until April 2026 at the earliest, even if you leave your course early" (DfE terms 2026-27). Earnings during your course, such as a placement year, do not trigger deductions before then. HMRC tells your employer that you have a loan, but not how much you owe. Check your employer has you on the correct plan: your online account has an "active plan type letter". Repayments are governed by the Education (Student Loans) (Repayment) Regulations 2009, as amended.
How can I check my Plan 5 balance and repayments?
Your balance, repayments and annual statement are in your SLC online repayment account; the annual statement showing how interest was applied is normally available by the end of August (GOV.UK). Your payslips and P60 show what your employer deducted in the tax year, and you need them for a refund claim or a Self Assessment return (GOV.UK). If you had more than one job, add up the payslips, because your P60 does not show a previous employer's deductions (HMRC). When you have nearly repaid, SLC may let you make the final repayments by Direct Debit so your employer does not take more than you owe.