If you started university in England on or after 1 August 2023, a significant change is landing this year that will shape your finances long after graduation: Plan 5 student loan repayments officially begin in April 2026.
Plan 5 is the newest repayment scheme for English undergraduate, PGCE, and Advanced Learner Loan borrowers, and it works differently from the plans that came before it. The most important difference is the repayment threshold — the salary level above which you start paying back your loan. For Plan 5, that threshold is set at £25,000 a year, which works out to roughly £2,083 a month or £480 a week. Compare that to Plan 2 (for students who started between 2012 and 2023), where the threshold has risen to £29,385 for 2026-27. That’s a meaningful gap: a Plan 5 graduate earning £27,000 a year will start making repayments, while a Plan 2 graduate on the same salary won’t pay anything at all.
The repayment rate itself remains the same across most plans — 9% of income above the threshold — so once you cross into repayment territory, the mechanics feel familiar. Repayments are calculated on gross income (before tax and National Insurance) and, if you’re employed, collected automatically through the PAYE system alongside your regular tax and National Insurance deductions. Self-employed graduates report and pay through Self Assessment instead.
Why does this matter now, even if you’re still studying?
Because the threshold you’ll eventually repay against depends entirely on when you started your course — not when you graduate or when you get your first job. If you’re on Plan 5, it’s worth building this lower threshold into your post-graduation budgeting expectations, since more of your early-career salary will be affected by loan deductions compared to students on Plan 2 just a few years ahead of you.
There’s also a longer-term detail worth knowing: Plan 5 loans are written off after 40 years, a longer repayment window than older plans, which changes the maths on whether some graduates will ever fully repay their loan versus simply paying the 9% surcharge on relevant earnings for four decades.
For current students, the practical takeaway is simple: know your plan type. You can check this through your Student Loans Company (SLC) online account, and you’ll need to confirm it with any employer when you start a job — if you don’t know, they’re required to default to Plan 1 deductions until HMRC corrects it, which could mean incorrect repayments in the short term.
As thresholds continue to shift each tax year (Plan 2’s threshold, for example, is set to freeze from April 2027 to April 2030), staying aware of updates to your specific plan will help you plan your finances accurately as you move from student life into your career.
