Plan 1 vs Plan 2 Student Loan: Key Differences Explained for 2025/26
Not sure which plan you're on or how they compare? Here's everything you need to know about repayment thresholds, interest rates, and how much you'll actually repay.
Quick Comparison: Plan 1 vs Plan 2
Plan 1 Threshold
£26,065
~25 year write-off
Plan 2 Threshold
£28,470
30 year write-off
Repayment Rate
9%
Both plans
Your student loan plan determines how much you repay each month and what interest you're charged. The two most common plans in England and Wales are Plan 1 (for those who started university before September 2012) and Plan 2 (for those who started between September 2012 and July 2023).
Both plans take 9% of your income above a set threshold, but the thresholds, interest rates, and write-off periods are very different. These differences can mean thousands of pounds more or less in total repayments over your working life. For the latest official guidance, see GOV.UK.
Full Comparison: Plan 1 vs Plan 2
| Feature | Plan 1 | Plan 2 |
|---|---|---|
| Who | Started before Sept 2012 (England/Wales) | Started Sept 2012 – July 2023 (England/Wales) |
| Threshold 2025/26 | £26,065/year (£2,172/month) | £28,470/year (£2,372/month) |
| Repayment rate | 9% of income above threshold | 9% of income above threshold |
| Interest rate | Lower of RPI (3.2%) or Bank Rate + 1% | RPI + up to 3% (max 6.2%) while studying; RPI to RPI+3% after, based on income |
| Write-off | 25 years or age 65 | 30 years after first eligible to repay |
| Threshold changes | Rises with RPI each April | Frozen at £29,385 from April 2026 until 2030 |
Note: The Plan 2 threshold freeze means that as wages rise, more of your income will be above the threshold each year — so your monthly repayments will gradually increase even if your salary stays the same in real terms.
Monthly Repayment Examples
Here's what you'd repay each month at different salary levels under each plan. The difference comes down to the threshold — Plan 2's higher threshold means you keep more of your earnings before repayments kick in.
£30,000 Salary
Plan 1
£29.53/month
Plan 2
£11.48/month
Plan 2 saves £18.05/month
£40,000 Salary
Plan 1
£104.53/month
Plan 2
£86.48/month
Plan 2 saves £18.05/month
£50,000 Salary
Plan 1
£179.53/month
Plan 2
£161.48/month
Plan 2 saves £18.05/month
How it's calculated: Take your annual salary, subtract the threshold, multiply by 9%, then divide by 12. For example, on £40,000 with Plan 1: (£40,000 − £26,065) × 9% ÷ 12 = £104.53/month.
Interest Rates Explained
This is where the two plans differ most significantly. Plan 1 interest is capped and relatively low — it's the lower of RPI or the Bank of England base rate plus 1%, which keeps it manageable.
Plan 2 interest is much higher. While you're studying, you pay RPI + 3%. After graduation, the rate scales with your income: if you earn below the threshold you pay RPI only, but at £50,000 and above you're paying the maximum rate of RPI + 3%. This means Plan 2 balances grow significantly faster, especially for higher earners. You can review the official terms and conditions for full details on how interest is applied.
Plan 1 Interest
- • Capped at the lower of RPI or base rate + 1%
- • Currently around 3.2%
- • Balance grows slowly
- • More likely to repay in full
Plan 2 Interest
- • RPI + up to 3% (currently up to 6.2%)
- • Scales with income after graduation
- • Balance grows significantly faster
- • Most borrowers won't repay in full
Which Plan Am I On?
Your plan depends on when and where you started your course:
Plan 1
You started university before September 2012 in England or Wales, or any time in Northern Ireland.
Plan 2
You started university between September 2012 and July 2023 in England or Wales.
Plan 5
You started university after August 2023 in England or Wales.
Plan 4
You studied in Scotland at any time.
If you're still not sure, check your payslip — it will show which plan your employer is deducting for. You can also log in to your Student Loans Company (SLC) account online to confirm your plan type. More details are available on GOV.UK's student loan repayment page.
Should You Overpay Your Student Loan?
Whether overpaying makes sense depends heavily on which plan you're on and how much you owe.
Plan 1: Maybe Worth It
If you have a relatively small balance and you're close to repaying in full before the write-off date, overpaying could save you money on interest. Plan 1 loans are smaller, so this is more common.
Plan 2: Usually Not Worth It
With typical balances of £30,000–£50,000 and high interest rates, most Plan 2 borrowers will never repay in full before the 30-year write-off. Overpaying means paying back money that would otherwise be written off.
Overpaid already? If you've continued making repayments after clearing your balance, you may be owed a refund. Read our student loan refund guide to find out how to claim back what you're owed.
Also: Plan 4 and Plan 5
While Plan 1 and Plan 2 are the most common, two other plans exist that are worth knowing about:
Plan 4 (Scotland)
- • Threshold: £32,745/year (2025/26)
- • Repayment rate: 9% above threshold
- • Write-off: 30 years or age 65
- • Higher threshold means lower monthly repayments
Plan 5 (Post-2023)
- • Threshold: £25,000/year (2025/26)
- • Repayment rate: 9% above threshold
- • Write-off: 40 years after first eligible to repay
- • Lower threshold and longer write-off than Plan 2
All plans share the same 9% repayment rate. The key differences are the thresholds, interest rates, and how long until the balance is written off.
What If I Have Both Plan 1 and Plan 2?
If you took out loans under both plans (for example, you started studying before 2012 and returned for a postgraduate course after 2012), you'll repay both simultaneously. Your employer deducts repayments based on the Plan 1 threshold (the lower one), and the Student Loans Company allocates the payments between your two loans.
Once the Plan 1 loan is fully repaid, your repayments switch to the Plan 2 threshold. This means your monthly repayments will drop until your salary rises above the higher Plan 2 threshold.
See How Student Loans Affect Your Take-Home Pay
Enter your salary and student loan plan to see exactly what you'll take home each month after tax, National Insurance, and student loan repayments.
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