If you started an undergraduate course in England in or after September 2023, you are on Plan 5. You repay 9% of what you earn above £25,000 a year, you only pay while your income is over that threshold, and anything left is written off 40 years after you start repaying. Repayments begin the April after you leave your course. Figures change each year, so check gov.uk for the latest.
What is Plan 5?
Plan 5 is the student loan repayment plan for most new undergraduate students in England who started their course on or after 1 September 2023. It sets out when you start repaying, how much you repay, the interest charged and when the loan is written off. Which plan you are on depends mainly on when you started studying, so if you began earlier you may be on a different plan with different rules. This guide focuses on Plan 5.
When do I start repaying?
You do not repay anything while you are studying. Repayments only begin in the April after you finish or leave your course, and even then, only once your income is above the repayment threshold. If you never earn above the threshold, you do not make repayments. This is one of the most reassuring features of the system: it is tied to what you earn, not to a fixed bill that lands regardless of your situation.
How much do I repay each month?
Under Plan 5, you repay 9% of your income above the threshold, which is £25,000 a year for the current period according to gov.uk. The 9% applies only to the part of your income over the threshold, not your whole salary. So if you earn a little over £25,000, your repayments are small; if you earn well above it, they are larger. If your income drops below the threshold, repayments simply pause until you are earning above it again.
How is the threshold worked out in practice?
The £25,000 figure is an annual threshold, and for most employed people it is applied through payroll across the year, so repayments come straight out of your pay alongside tax, a bit like another deduction. Because it is based on income over the threshold, a pay rise increases your repayment only on the extra amount above £25,000, never on the whole salary. The threshold itself is set by the government and reviewed over time, so the exact figure can change in future years.
When is the loan written off?
Under Plan 5, any remaining balance is written off 40 years after the April you were first due to start repaying. After that point, you owe nothing more, regardless of how much is left. For some people this means they will not repay the full amount borrowed before it is cleared, which is why many advisers describe student loan repayments as working more like a graduate contribution than a traditional debt.
How does interest work on Plan 5?
Interest is added to your balance, and for Plan 5 it is generally linked to inflation as measured by the Retail Price Index. The headline interest figure can sound alarming, but because repayments are based on income and the balance is written off after 40 years, the interest does not always change what many people actually repay each month. What you pay is driven by your income above the threshold, not by the size of the balance. For your exact rate, check the current figures on gov.uk.
Will student loan repayments stop me getting a mortgage?
Repayments are a regular outgoing, so lenders may take them into account, much like other monthly commitments. However, the loan does not appear on your credit file in the way commercial borrowing does, and it does not affect your credit score directly. Because repayments are income-linked and stop if your income falls, many people find they are more manageable than a fixed loan of the same headline size. As always, your own circumstances matter, so it is worth getting tailored advice for big decisions.
Where do I get the official, current figures?
This is a general, educational guide, not financial advice. The threshold, interest rate, write-off period and the rules for each plan are set by the government and can change, so always rely on the official information on gov.uk for anything that affects your own money. If you are unsure which plan you are on, the gov.uk repayment pages explain how to check.
What is the first step toward studying?
Understanding repayment can make the whole idea of student finance feel less daunting, which is often what holds people back from applying at all. If you would like help thinking through your study options first, you can browse courses, read our guide to Student Finance England, or message us on WhatsApp for free, friendly guidance. We keep things plain and pressure-free. Figures change each year, so check gov.uk for the latest, and we are happy to point you in the right direction.