What Student Loan Plan Am I On? — Your Guide To Student Loan Plans
Everything you need to know about student loan plans and interest rates.
Are you even a student if you’re not thinking about student loans all the time? When will it drop into my account? Will I have enough money for rent and food? Do I have to repay this all back?
Around £20 billion per year is loaned to higher education students — but a lot of that won’t be repaid.
Many of us will only manage to pay back some of the student loans we borrowed over our university days. But don’t sweat it. You don’t technically have to pay it all back. How nice is that?
But before you wonder how much you need to repay, and when, you’ll need to figure out what student loan plan you’re on, and don’t forget the student loan interest rates that add to the sum, too!
It’s a lot to take in, and can be pretty confusing at the best of times. That’s why we’re here to help you understand what student loans are, which student loan plan you’re on and the differences between them, as well as tackling the fun topic of student loan interest rates. Hold for applause.
In this guide:
- What are student loans?
- Which student loan plan am I on?
- Plan 1 student loan
- Plan 2 student loan
- Plan 4 student loan
- Plan 5 student loan
- Student loan interest rates UK
- Postgraduate student loan
Everything you need to know about student loan plans
What are student loans?
Student loans are loans given to students to help pay for higher education. It aims to cover areas like tuition fees and living expenses (rent, bills, food).
Students borrow a sum of money based on their household income and are expected to repay after a specific period of time and depending on how much they earn when they get into employment.
For most university students in the UK, student loans cover tuition fees (the cost of your education, which is approximately £9,250 a year) and maintenance loans (money to help you live while at uni).
To find out when you’re expected to receive your student loan payments, check out our university maintenance loan guide for all the important dates in 2023/24.
Which student loan plan am I on?
The student loan plan you’re on depends on when you went to university and which country gave you the loan — normally the place you’re living in before you go to uni.
For information on student maintenance loans and the minimum maintenance loan you could be elligible for, check out our student maintenance loans guide.
| Where you’re from | England | Northern Ireland | Scotland | Wales |
|---|---|---|---|---|
| Started uni between 1st September 1998 and 30th August 2012 | Plan 1 | Plan 1 | Plan 4 | Plan 1 |
| Started uni between 1st September 2012 and 31st July 2023 | Plan 2 | Plan 1 | Plan 4 | Plan 2 |
| Started uni on or after 1st August 2023 | Plan 5 | Plan 1 | Plan 4 | Plan 2 |
Plan 1 student loan
Plan 1 student loans are for those in England and Wales who took out the loan between September 1998 and August 2012. For Northern Ireland, you’re on a plan 1 student loan if you took out a loan any time since September 1998.
If this is you, you’re one of the lucky ones. You likely had lower tuition fees and lower interest rates, too.
The repayment threshold for plan 1 loans is currently £22,015 a year, before tax. This threshold has increased each April since 2012 so ensure you check for changes regularly. If you earn less than the threshold, you won’t need to pay anything until you’re earning more.
Once you start earning more than the threshold, you will pay 9% on the amount above the threshold. For example, if you earn £5,000 above the threshold (£27,015), you’ll pay 9% of £5,000 — £450 for the year.
Here’s an example of how your monthly student loan repayments may look like:
| Annual wage | Monthly repayments for Plan 1 Student Loan |
|---|---|
| £22,015 | £0 |
| £25,000 | £22 |
| £30,000 | £60 |
| £35,000 | £97 |
| £40,000 | £135 |
| £45,000 | £172 |
| £50,000 | £210 |
Your plan 1 student loan is written off depending on when you started your studies.
If you started in 2005/06 or earlier, your student loan plan 1 will be written off when you reach 65 years old. If you started in 2006/07 or later, your plan 1 student loan will be written off after 25 years — starting from the first April after you graduated.
The loan will be written off and means you’ll no longer have to make repayments, even if you didn’t pay all of it back.
Plan 2 student loan
Plan 2 student loans are arguably the worst plan of the four. Mostly because students on a plan 2 student loan will pay more in fees and more interest.
You’ll be on a plan 2 student loan if you’re from England or Wales and took out student loans after September 2012.
You’ll only start making repayments from the April after you’ve graduated, and only if you’re earning over the threshold.
For plan 2 student loans, the threshold is £27,295 a year, before tax. Earning less than this will mean you won’t have to pay anything, but as soon as you earn more, you’ll have to pay 9% on the amount over the threshold.
For example, earning £31,295 (£4,000 over the threshold), you’ll need to pay 9% of £4,000 — adding up to £360 a year.
Here’s an example of how your monthly student loan repayments may look like:
| Annual wages | Monthly repayments for Plan 2 Student Loan |
|---|---|
| £27,295 | £0 |
| £30,000 | £20 |
| £35,000 | £58 |
| £40,000 | £95 |
| £45,000 | £133 |
| £50,000 | £170 |
If you have a plan 2 student loan, they’ll be written off after 30 years (starting from the first April after you graduate). Again, similar to plan 1 student loans, even if you haven’t paid all (or any) of the student loan back, it will still get written off after the time frame.
Plan 4 student loan
Plan 4 student loans were introduced in April 2021.
It is only available to Scottish students. Any Scottish students who started their degree on or after the 1st September 1998 will have been moved to a plan 4 student loan.
As usual, you’ll only need to make repayments after the April you’ve graduated and once you’re earning over the threshold.
The threshold for plan 4 student loans is £27,660 a year, before tax. You’ll pay 9% of your earnings over the threshold. For example, if you earn £32,660, you’ll repay 9% of the £5,000 that is over the threshold. Equaling to £450 a year.
Here’s an example of how your monthly student loan repayments may look like:
| Annual wages | Monthly repayments for Plan 4 Student Loan |
|---|---|
| £27,660 | £0 |
| £30,000 | £18 |
| £35,000 | £55 |
| £40,000 | £93 |
| £45,000 | £130 |
| £50,000 | £168 |
If you started studying in 2006/07, your plan 4 student loan could be written off either:
- Once you’ve turned 65 years old
- After 30 years since the first April after you graduate
But, if you started studying in 2007/08, your loan will be written off 30 years after the first April you graduate.
Plan 5 student loan
Plan 5 student loans are only applicable to students from England, starting their degree on or after 1st August 2023.
The threshold for plan 5 student loan repayments is £25,000 a year before tax. Once you earn over this, you’ll pay 9% of the amount above the threshold. If you earn £30,000, for example, you’ll pay 9% of the £5,000 above the threshold, adding up to £450 a year.
Here’s an example of how your monthly student loan repayments may look like:
| Annual wages | Monthly repayments for Plan 5 Student Loan |
|---|---|
| £25,000 | £0 |
| £30,000 | £38 |
| £35,000 | £75 |
| £40,000 | £113 |
| £45,000 | £150 |
| £50,000 | £188 |
Regarding when plan 5 student loans will be written off, it’s a bit different to the other plans.
Plan 5 student loans will be written off after 40 years – again, the same thing applies, if you don’t pay all, or any, of your student loan, it will still be written off after 40 years and you’ll owe nothing.
Student loan interest rates UK
Interest rates differ depending on which student loan plan you’re on.
For a plan 1 student loan, the interest rates are usually set each September and is always whichever is lowest between the following:
- The RPI rate from March of the same year
- The Bank of England base rate plus 1%
The interest rate on plan 1 student loans are always the same whether you’re studying or graduated, and isn’t determined by your yearly earnings, either.
The current interest rate on plan 1 loans is 6.25%. This is because the Bank of England base rate is 5.25% as of September 2023. So add 1% and you get an interest rate of 6.25%, which is lower than the RPI figure of March 2023 (13.5%).
For plan 2 student loans, the interest rate can vary. Annoyingly.
While you’re studying, and until the April after you’ve left your course, the interest rate is typically RPI plus 3%.
Generally, the RPI rate is set every September using the rate from March of the same year. In March 2023, RPI was 13.5%, so from September 2023 until August 2024, student loan interest rates were set to 16.5%.
But, thanks to Prevailing Market Rate, the interest rate has been reduced to 7.3% from September 2023 until November 2023 for plan 2 loans. From December 2023, it could return to RPI + 3% but may change again based on the prevailing market rate.
Once you’ve graduated, the interest rate of your plan 2 student loan is normally set at RPI plus anything from 0-3% (depending on your earnings).
- Earning less than £27,295, the interest rate is just RPI
- Earning over £27,295, the interest rate is RPI plus a percentage of up to 3% – this percentage will rise in line with your earnings. But, it will stop increasing when you earn more than £49,130. It will then be capped at 3%
Plan 4 student loans, for Scottish students only, the interest rate is set in September of each year, and determined by the lowest of the following two:
- The RPI rate from March of the same year
- The Bank of England rate plus 1%
This is much like the plan 1 student loan, so currently the interest rate stands at 6.25%.
For plan 5 student loans, the interest rate will be based on the RPI rate – a measure of inflation.
Postgraduate student loan
Master’s students are able to apply for another student loan to help cover the cost of their postgraduate education. Currently, you can be loaned up to £12,167.
This loan is usually more than the tuition fees for a master’s degree, so you’ll have some extra money to help cover living costs. However, if your course costs more than the max loan amount you can borrow, you’ll have to fund the rest yourself.
A postgraduate student loan will be divided equally across the year of your studies, or equally across each year if your studies are longer than one year. You will be paid directly, instead of the university getting the money.
Similar rules apply to postgraduate loans as undergraduate student loans. You’ll only have to repay your postgraduate student loan from the April after your graduation, as long as you’re earning above the threshold.
The threshold for repaying postgraduate student loans is £21,000. For Scottish students however, the threshold is £25,375 a year, and in Northern Ireland, it’s £22,015 a year.
You’ll repay 6% of everything above the threshold, although in Scotland and Northern Ireland it’s 9%. This will be deducted from your wages just like undergraduate student loans. If you’re not earning over the threshold though, you won’t need to start repaying anything back.
After 30 years from the April after you’ve graduated, any debt remaining will be wiped.
If you’re considering doing a Master’s degree, here are all the ways to do a free Master’s degree in the UK.
