Student Loan Plan 5 Explained

Introducing Plan 5

The UK government is introducing a new student loan repayment plan, known as Plan 5. New students starting September 2023 will be put on Plan 5 loans if they are borrowing money to fund their degree.

Under this plan, graduates will be required to make monthly repayments based on their income.

Use ourStudent Loan Repayments Calculatorto figure out exactly what you'll repay.

How much will I have to repay

If a graduate earns less than £25,000 per year, they will not have to make any repayments. This means that graduates who earn less than the threshold will not have to repay their student loans until their income increases.

For example, if a graduate earns £24,000 per year, they will not have to repay any of their student loan debt.

However, for those who earn above the threshold, the repayment will be calculated as 9% of their income above the threshold.

For instance, if a graduate earns £35,000 per year, they will have to repay 9% of the amount above the threshold, which is £10,000. This means they will have to pay £75 per month towards their student loan.

How Student Loan Plan 5 interest rates are calculated

Interest will be accrued based on Retail Price Index (RPI). As inflation is relatively high in the UK, RPI currently stands at 8.9%, however, this rate may decrease as inflation falls.

When will my Student Loan be written off?

Plan 5 Student Loans could be written off before you fully repay your full loan amount. Usually your loan can be written off (you no longer have to make repayments) if:

• You've turned 65 years old
• 40 years have passed since you first became eligible to repay your loan

Otherwise, your loan may also be written off if you can no longer work and receive disability-related benefit.

You can also figure out how much of your salary you'll take home after your student loan repayments with our Salary Calculator.