Plan 2 Student Loan Repayment Calculator

How Plan 2 Student Loan Repayments Work

Plan 2 was introduced for students starting courses in England and Wales from September 2012 alongside the rise in tuition fees to £9,000 per year. It replaced Plan 1 as the standard undergraduate loan for English and Welsh students.

Repayments are income-contingent: you pay 9% of your gross income above the threshold of £29,385 per year (2026/27, frozen until 2030). If you earn below this, you pay nothing. Repayments are collected automatically through PAYE if you are employed, or through Self Assessment if you are self-employed.

After 30 years from April after you graduate (or leave your course), any remaining balance is written off by the Student Loans Company. This write-off is not treated as taxable income. For the majority of Plan 2 borrowers, this write-off is the actual outcome of their loan — not full repayment.

Plan 2 Interest Rates Explained

Plan 2 uses one of the most complex interest rate structures of any UK student loan. While studying, interest accrues at RPI + 3%. Once you leave your course and are repaying, the rate is income-linked:

• —Earning below the repayment threshold (£29,385): RPI only
• —Earning between £29,385 and £49,130: RPI + between 0% and 3% on a sliding scale
• —Earning above £49,130: RPI + 3% (the maximum rate)

With RPI at elevated levels in recent years, this has meant interest rates of 7–8% for many Plan 2 borrowers. Our calculator uses a fixed estimate of 7.3% to project your balance — the actual rate will vary year by year based on RPI.

Will You Repay Your Plan 2 Loan in Full?

Research by the Institute for Fiscal Studies (IFS) consistently finds that fewer than 25% of Plan 2 borrowers will repay their loan in full before the 30-year write-off. The combination of high starting balances (often £40,000–£60,000 for a typical three-year English degree including maintenance loans), compound interest, and the level of the repayment threshold means that many graduates repay for the full 30 years without clearing the balance.

Graduates who are most likely to fully repay tend to be those with: higher salaries earlier in their careers, lower initial balances (for example, students who received parental support for living costs), or both. Those who enter lower-to-middle salary careers are almost certainly in the write-off group.

Use the calculator above to find your personal projection. The key indicator at the top of your results — green for likely full repayment, amber for likely write-off — is the most important single output of this tool.

Plan 2 vs Plan 5: Key Differences

Plan 5 replaced Plan 2 for students starting courses in England from August 2023. While both apply a 9% repayment rate, they differ in three important ways: