You repay a Plan 2 student loan only when your income is over the threshold, which GOV.UK lists as 29,385 pounds a year, 2,448 pounds a month or 565 pounds a week as of Nov 2026. You pay 9% of what you earn above that line, and whatever's left is written off 30 years after the April you were first due to repay.
Plan 2 is the repayment plan for undergraduate loans from Student Finance England on courses that started between 1 Sept 2012 and 31 Jul 2023, and from Student Finance Wales on courses that started from 1 Sept 2012, so it's on a lot of UK payslips. I've set out how it works using the GOV.UK guide Repaying your student loan, read on 2 Nov 2026, so you can see which plan you're on, when repayments start, how much leaves your pay, how interest is added and when the loan is wiped.
A quick word on what counts as income here. GOV.UK defines it as the amount you earn, including bonuses and overtime, before tax and other deductions. The thresholds change on 6 April every year, so the figures below are the ones GOV.UK showed on the day I read it.
Are you on Plan 2? How the plan is decided
You can't choose your repayment plan. It depends on where you applied for student finance, when your course started and what kind of course it was, and if you have more than one loan you could be on more than one plan. GOV.UK sets it out like this:
- Student Finance England, course started between 1 Sept 2012 and 31 Jul 2023: Plan 2 for an undergraduate course, a PGCE, an Advanced Learner Loan or a Higher Education Short Course Loan.
- Student Finance England, course started on or after 1 Aug 2023: Plan 5 for undergraduate courses and PGCEs, with Plan 2 only for a Higher Education Short Course Loan.
- Student Finance Wales, course started on or after 1 Sept 2012: Plan 2 for an undergraduate course or a PGCE.
- Before 1 Sept 2012 in England or Wales, or any course through Student Finance Northern Ireland: Plan 1.
- Student Awards Agency Scotland: Plan 4, for undergraduate and postgraduate courses.
- A postgraduate master's or doctoral course in England or Wales: a Postgraduate Loan plan.
If you think you're on the wrong plan, sign in to your online account, download your 'active plan type letter' and compare it with the plan your employer has you on. If they don't match, show the letter to your employer so they can update payroll. GOV.UK says you can get a refund if you paid back too much because you were on the wrong plan type.
Thresholds, rates and write-off dates side by side
Here's how Plan 2 compares with the other plans, using the GOV.UK thresholds and write-off rules. You repay 9% of income over the threshold on Plans 1, 2, 4 and 5, and 6% on a Postgraduate Loan.
| Plan | Yearly threshold | Monthly threshold | Weekly threshold | When it's written off |
|---|---|---|---|---|
| Plan 1 | 26,900 pounds | 2,241 pounds | 517 pounds | 25 years after the April you were first due to repay (first loan paid on or after 1 Sept 2006), or at 65 if the first loan came earlier |
| Plan 2 | 29,385 pounds | 2,448 pounds | 565 pounds | 30 years after the April you were first due to repay |
| Plan 4 | 33,795 pounds | 2,816 pounds | 649 pounds | 30 years after the April you were first due to repay (first loan from 1 Aug 2007); earlier loans at 65 or after 30 years, whichever comes first |
| Plan 5 | 25,000 pounds | 2,083 pounds | 480 pounds | 40 years after the April you were first due to repay |
| Postgraduate Loan | 21,000 pounds | 1,750 pounds | 403 pounds | 30 years after the April you were first due to repay (England or Wales) |
The earliest you'll start repaying is the April after you leave your course. If you study part-time on a course longer than 4 years that started before 1 Jan 2027, you'll start in the April that falls 4 years after the course began. Repayments stop automatically if you stop working or your income drops below the threshold.
Why the size of your balance doesn't change your monthly repayment
This is the part that surprises people. GOV.UK states plainly that the amount you owe, meaning what you borrowed plus interest, has no impact on how much you repay each year. Your repayment is worked out only from your income above the threshold. Someone who owes a lot and someone who owes a little, on the same Plan 2 salary, hand over the same amount each month.
That's also why GOV.UK warns that you might not benefit from making extra repayments, because your loan will be written off at the end of the loan term. There's no penalty for paying early, but you can't get a refund of extra repayments once they're made. GOV.UK suggests checking when your loan will be written off first, and speaking to a financial adviser if you're unsure.
How the maths works on a payslip
GOV.UK gives a Plan 2 example with two jobs. If you're paid 2,500 pounds a month from one job and 500 pounds a month from another, you only repay on the income from the 2,500 pounds job, because that's the only one above the 2,448 pounds monthly threshold. Employers look at each job separately, not your combined pay.
Another GOV.UK example covers a Postgraduate Loan plus a Plan 2 loan on an income of 30,000 pounds a year, or 2,500 pounds a month. You'd repay 6% of the 750 pounds above the Postgraduate threshold, which is 45 pounds, plus 9% of the 52 pounds above the Plan 2 threshold, which is 4.68 pounds. The monthly total is 49 pounds. If you're self-employed, HM Revenue and Customs (HMRC) works out what you owe from your Self Assessment tax return, based on your income for the whole year.
How interest is added on Plan 2
Plan 2 interest is a Variable Interest Rate, so it can change with your circumstances. While you're studying, you're usually charged the Retail Price Index (RPI) plus 3%, but GOV.UK says there's currently a cap of 6%. After you finish or leave the course, the rate depends on your annual income:
| Annual income | Plan 2 interest rate GOV.UK lists |
|---|---|
| 29,385 pounds or less | 4.1% |
| 29,386 pounds to 52,884 pounds | 4.1%, plus up to 1.9% |
| 52,885 pounds or more | 6% |
Interest is still added to the amount you owe even when you're not working or your income is below the threshold. You'll see how it's been applied in your annual statement, which is normally in your online repayment account by the end of August. Student loans don't appear on credit reports and don't affect your credit score, though GOV.UK notes lenders may consider them in affordability checks for things like a mortgage.
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Paying, refunds and moving abroad
If you're an employee, repayments come out of your salary at the same time as tax and National Insurance, and your payslip shows the deduction. Self-employed people pay through Self Assessment at the same time as their tax. Pension income counts too: HMRC uses your total annual income, including workplace, private and State Pension income. You can make extra repayments through your online account, by bank transfer or by cheque, and you'll need your customer reference number (CRN) so the money reaches your account.
You can ask for a refund if you've paid more than you owe, if your income over the whole tax year (6 April to 5 April) was below the yearly threshold, if repayments started before they should have, or if your employer had you on the wrong plan. It can take around 4 weeks for salary deductions to stop after you've cleared the loan, so GOV.UK suggests switching to Direct Debit in your final year. If you leave the UK for more than 3 months, you must tell the Student Loans Company (SLC) by updating your employment details, or you could build up arrears.
If you're trying to make your pay go further while you repay, my round-ups of money saving apps in the UK and money saving tips that work are good places to start.
My plain advice on Plan 2 repayments
Start with the GOV.UK page Repaying your student loan, then check your payslip shows the right plan, because a wrong plan code is the easiest mistake to fix and GOV.UK will refund it. Keep your payslips and P60s, since you'll need them for any refund. Before you throw spare money at the balance, read the write-off rules on that same guide and talk to a financial adviser, because GOV.UK itself says extra payments might not benefit you.
Frequently asked questions
What is the Plan 2 repayment threshold?
GOV.UK, as of Nov 2026, lists 29,385 pounds a year, 2,448 pounds a month or 565 pounds a week. You repay 9% of your income above that. The thresholds change on 6 April every year.
When is a Plan 2 student loan written off?
GOV.UK says Plan 2 loans are written off 30 years after the April you were first due to repay.
Does a bigger balance mean bigger repayments?
No. GOV.UK says the amount you owe has no impact on how much you repay each year. Repayments depend only on your income above the threshold.
What interest rate is charged on Plan 2?
GOV.UK lists 4.1% if your income is 29,385 pounds or less, 4.1% plus up to 1.9% between 29,386 pounds and 52,884 pounds, and 6% at 52,885 pounds or more. While studying, the rate is usually RPI plus 3%, capped at 6%.
Can I get money back if I earned less than the threshold?
Yes. If repayments were taken but your income over the whole tax year was below the yearly threshold, sign in to your repayment account and ask for a refund once that tax year has ended.
Do student loans affect my credit score?
GOV.UK says student loans don't appear on credit reports and don't affect your credit score, but lenders may consider them during affordability checks, for example for a mortgage.
