Plan 2 vs Plan 5 Student Loan Repayments in 2026/27

Plan 2 and Plan 5 both take 9% of relevant income above their repayment threshold, but the thresholds differ. For 2026/27, Plan 2 starts at £29,385 a year and Plan 5 starts at £25,000. At the same salary, Plan 5 therefore normally takes more through payroll while both loans remain repayable. This plan 2 vs plan 5 student loan comparison uses the 2026/27 thresholds.

That does not tell you the total amount you will repay over your working life. Your earnings, balance, interest and repayment period all matter. A person who repays the balance early faces a different outcome from someone whose remaining loan reaches its cancellation date.

You cannot choose whichever plan produces the smaller deduction. The course, funding body and borrowing dates determine your plan. Check your student loan account or the notification from the Student Loans Company before using a calculator or giving details to your employer.

Plan 2 vs plan 5 student loan thresholds for 2026/27

The annual Plan 2 threshold is £29,385. Subtract that from your relevant annual income and apply 9% to any positive remainder. If your income stays below the threshold, the simple annual calculation gives no compulsory repayment.

Plan 5 uses the same 9% rate with an annual threshold of £25,000. The difference between the thresholds is £4,385. For a person whose income exceeds both thresholds, multiplying that difference by 9% gives an annualised difference of £394.65.

That £394.65 difference is not a flat fee for holding a Plan 5 loan. It follows from the gap between the thresholds at these rates. It changes when thresholds change and does not apply in full if income falls between the two thresholds or if the remaining loan balance limits repayment.

Employers use the relevant weekly or monthly threshold for each pay period. They also apply payroll rounding. The annual examples in this article explain the comparison; they do not promise that twelve payslip deductions will total exactly the same amount.

What happens at £30,000

At £30,000, the annual Plan 2 calculation begins with £30,000 less £29,385. That leaves £615 above the threshold. Multiply £615 by 9% and the annualised repayment comes to £55.35.

For Plan 5, subtract £25,000 from £30,000. The £5,000 remainder produces an annualised repayment of £450. The difference between these two plan 2 vs plan 5 student loan examples is £394.65 over a year.

For budgeting, £450 divided by twelve is £37.50, while £55.35 divided by twelve is about £4.61. Actual monthly payroll deductions can differ because payroll does not simply divide a precomputed annual repayment by twelve. Use the monthly result as an estimate and compare it with your employer's calculation.

Income tax and employee National Insurance still apply separately. A loan deduction does not replace either tax. If you want the amount that reaches your bank account, combine the correct loan plan with the other deductions in the salary calculator.

Comparisons at £40,000 and £50,000

At £40,000, Plan 2 applies 9% to £10,615, giving £955.35 in the annual illustration. Plan 5 applies 9% to £15,000, giving £1,350. The plan 2 vs plan 5 student loan difference remains £394.65 because this salary exceeds both thresholds.

At £50,000, the corresponding figures are £1,855.35 for Plan 2 and £2,250 for Plan 5. Neither plan takes 9% of the whole £50,000. Each excludes the income below its own threshold before applying the repayment rate.

A £1,000 increase in annual income above both thresholds adds £90 to the annualised compulsory repayment under either plan. The tax and National Insurance consequences of the same rise depend on the relevant tax bands. Keep those calculations separate before adding the deductions together.

Use the student loan repayment calculator to compare salaries under the correct year. Then use the take home pay calculator if you want to include your pension and employment deductions in the same budget.

Income between the thresholds

The comparison changes when income falls below £29,385 but exceeds £25,000. At £27,000, the simple annual Plan 2 estimate gives no repayment. Plan 5 applies 9% to £2,000 and gives £180.

This is why the annual £394.65 gap should not appear as a universal claim about every borrower. A person earning £27,000 has a smaller gap in compulsory deductions. A person below £25,000 has no repayment under either plan in the same straightforward annual illustration.

Irregular income adds another complication. A high earning month can produce a payroll repayment even if total income for the year finishes below the annual threshold. The Student Loans Company has rules for requesting a refund in qualifying circumstances. Keep your final earnings records and ask about eligibility rather than assuming the annual calculator automatically arranges a refund.

Thirty years versus forty years

For Plan 2, the remaining loan normally reaches cancellation thirty years after the April when you were first due to repay. For Plan 5, the corresponding period is forty years. Neither clock simply begins on the day you start university or receive the first loan payment.

The longer Plan 5 period can expose a borrower to compulsory repayments for more years. That does not prove that every Plan 5 borrower will repay more in total in this plan 2 vs plan 5 student loan comparison. Earnings and the outstanding balance affect whether a borrower clears the loan before the cancellation date.

If income stays low enough, compulsory repayments may remain small. If income rises substantially, the borrower may clear the balance earlier. A reliable lifetime comparison therefore needs a forecast of earnings and interest rather than one salary snapshot.

Do not describe cancellation as permission to ignore repayments that become due. The official conditions and the Student Loans Company's account records govern the debt. Check the cancellation information that applies to your own plan, particularly if your borrowing history spans several courses.

Interest and total repayment are different questions

The payroll repayment rate is not the interest rate. Interest affects the outstanding loan balance, while the compulsory repayment formula usually depends on income above the threshold. A larger balance does not automatically increase the standard payroll percentage.

Interest rules differ between plans and can change over time. This article does not freeze a current interest rate into a lifetime forecast. Check the rate shown in your account and the current official repayment guidance before making an estimate that extends beyond the present tax year.

A graduate whose loan would otherwise reach cancellation may gain less from a voluntary payment than someone who expects to clear the balance. A voluntary payment also uses cash that might meet other needs. Do not treat the largest balance on a statement as sufficient evidence that you should make an extra payment.

The calculators linked here estimate compulsory deductions, not investment returns or the best use of savings. For a personal decision about voluntary repayment, establish your likely repayment path and consider appropriately qualified guidance rather than relying on one annual example.

Postgraduate loans and multiple plans

A postgraduate loan creates a separate repayment calculation. For 2026/27, its annual threshold is £21,000 and its rate is 6%. Someone with an undergraduate plan and a postgraduate loan can therefore face both deductions at the same time.

At £40,000, the annual postgraduate illustration gives £1,140. Adding that to the Plan 2 illustration gives £2,095.35. Adding it to the Plan 5 illustration gives £2,490. These examples explain separate undergraduate and postgraduate deductions, not a rule to add two undergraduate percentages together.

If you have more than one undergraduate repayment plan, do not manually stack a full 9% deduction for each. The official rules for multiple plans handle that situation differently. Give payroll the accurate information and use the Student Loans Company's guidance for your combination of borrowing.

Checking your payslip and account

Compare the plan on your payslip with the plan in your student loan account. Check the pay period, gross earnings relevant to repayment and any bonus. A deduction in a bonus month may look unusually large without meaning that the annual threshold has changed.

Keep your employer informed when the Student Loans Company issues the appropriate stop instruction. The lender and payroll records determine when deductions end. A calculator cannot see your outstanding balance or prevent a final overpayment automatically.

What about Plan 1 and Plan 4 (Scotland) loans?

This comparison focuses on Plan 2 and Plan 5 because most English graduates now hold one of the two, but the same 9% repayment mechanic applies across the older plans. Plan 1 covers loans taken out before September 2012 in England and Wales, plus Northern Ireland loans. Plan 4 is the Scottish plan, held by borrowers who took funding through SAAS, so searches for a Scotland student loan repayment calculator are really asking about Plan 4.

Each plan has its own repayment threshold, and the thresholds move every April, so a figure from an old article can mislead. Your payslip shows the plan type your employer is using, and your Student Loans Company account confirms the plan and the balance. If the wrong plan appears on your payslip, payroll can correct it and the overpayment route below applies. The student loan repayment calculator runs your salary against the current thresholds if you want the number for your own plan.

Can you overpay a student loan, and can you claim it back?

Yes. Overpayments happen when deductions continue after the loan is cleared, when your yearly income ends up below the threshold even though monthly pay crossed it in busy months, or when you are put on the wrong plan. The Student Loans Company refunds overpayments, and switching to Direct Debit for the final stretch of the loan is the standard way to stop the cleared loan problem before it starts.

Plan 2 vs plan 5 student loan: frequently asked questions

How much more does Plan 5 take than Plan 2 each year?

Above both thresholds, Plan 5 takes £394.65 more per year in the 2026/27 annual illustration, because its threshold is £4,385 lower. Below £29,385, the plan 2 vs plan 5 student loan gap shrinks, and below £25,000 neither plan takes anything.

Can I choose whether I am on Plan 2 or Plan 5?

No. Your course, funding body and borrowing dates decide your plan, not your preference. Check your student loan account or the Student Loans Company notification before telling your employer which plan 2 vs plan 5 student loan rules apply to you.

Do the 30 and 40 year write-off periods change what I pay monthly?

No. The monthly payroll deduction depends only on income above your threshold. The write-off period decides how long compulsory repayments can continue, which affects the lifetime total but not the 9% rate in this plan 2 vs plan 5 student loan comparison.

Official sources

The thresholds, repayment rates and payroll explanations come from GOV.UK's guide to what you repay. The cancellation periods come from GOV.UK's student loan write off and cancellation guidance.

Use these official pages alongside your account records. The examples cover standard annualised repayments for 2026/27 and exclude individual adjustments, balance limits and payroll rounding. They help explain the rules but cannot guarantee your lifetime repayment total.