The Golden Rule: 9%
For all undergraduate plans (1, 2, 4, 5), you repay 9% of everything you earn above the threshold. If you earn below the threshold for your plan, you pay £0.
Example: If your threshold is £27,295 and
you earn £28,295, you earn £1,000 "over" the line. You repay
9% of that £1,000, which is £90 for the year (or £7.50/month).
The Plans Breakdown
Plan 1
Pre-2012- Who: Mostly English/Welsh students who started before Sept 2012.
- Threshold: £24,990 / year
- Interest: Low (tracked to BOE base rate / inflation).
- Write-off: Usually age 65 or 25 years after graduating.
Plan 2
2012 - 2023- Who: English/Welsh students who started between Sept 2012 and July 2023.
- Threshold: £27,295 / year (frozen).
- Interest: High (often RPI + 3%).
- Write-off: 30 years after graduating.
Plan 4
Scotland- Who: Scottish students (and EU students studying in Scotland).
- Threshold: £31,395 / year (highest threshold).
- Interest: Lower (Base rate + 1% or RPI).
- Write-off: 30 years (or age 65 if older loans).
Plan 5
New (2023+)- Who: New students starting Aug 2023 onwards.
- Threshold: £25,000 / year.
- Interest: Tracked to RPI only (no "+3%").
- Write-off: 40 years (Yes, forty).
Note: Being on Plan 5 means you repay more per month
than Plan 2 (because the threshold is lower) AND you
pay for longer.
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Postgraduate Loans
If you did a Masters or PhD (English/Welsh), you might have a Postgraduate Loan. These are repaid on top of your undergraduate loan.
- Threshold: £21,000 / year
- Rate: 6%
Limit Warning: If you earn £30k and have Plan 2 + Postgrad, you pay 9% on income over £27,295 AND 6% on income over £21,000. It adds up fast (effective tax rate > 40% for many graduates).