Plan 5 Student Loan Repayment Calculator

What Is Plan 5 and Who Does It Apply To?

Plan 5 was introduced by the UK Government and applies to students in England who started their undergraduate course from August 2023 onwards. It replaced Plan 2 as the standard loan arrangement for new English students.

The plan was designed alongside the freezing of the repayment threshold at £25,000 until 2025/26 at the earliest. Compared to Plan 2, Plan 5 lowers the threshold (meaning graduates start repaying sooner), extends the write-off period from 30 to 40 years, and reduces the interest rate to RPI only (removing the RPI + 3% element).

The overall effect is that Plan 5 graduates will typically pay more each month than Plan 2 graduates on the same salary, and will pay for a longer potential period. However, the lower interest rate means balances grow more slowly, and more graduates are expected to repay in full under Plan 5 than under Plan 2.

Plan 5 Interest Rate

Unlike Plan 2, Plan 5 uses a simpler interest rate structure: RPI (Retail Price Index) inflation only, regardless of your income. There is no income-linked surcharge as there is with Plan 2.

Our calculator uses a fixed estimate of 3.1% for Plan 5 projections. This reflects a mid-range estimate for RPI over a long repayment period. Actual rates will vary annually based on published RPI figures.

In real terms, if RPI equals the rate of general price inflation, your loan balance stays roughly constant in real value (neither growing nor shrinking in purchasing power terms). This is a significant improvement over Plan 2, where balances have grown substantially in real terms in years of high inflation combined with high interest margins.

Will You Repay Your Plan 5 Loan in Full?

The Government's stated intention with Plan 5 was that more graduates should fully repay their loans. The lower threshold means graduates in modest-salary jobs contribute more, and the lower interest rate helps prevent balance explosion. Official estimates suggest that around 45% of Plan 5 borrowers will repay in full — a significant improvement over Plan 2's roughly 25%.

However, for graduates who end up in lower-to-middle income careers, the 40-year write-off remains the likely outcome. A key consideration: because the write-off is 40 years (not 30), graduates will be repaying into their 60s if they do not pay off the loan, meaning the 'tax' burden extends well into the typical retirement planning years.

Use the calculator above to see which outcome is projected for your specific situation. As with all our projections, the green or amber badge at the top of your results is the key indicator.

Plan 5 vs Plan 2: Is Plan 5 Better or Worse?

This depends heavily on your expected career earnings. Plan 5 is generally better for higher earners who expect to repay in full — they pay less interest overall because of the lower rate. Plan 5 is generally worse for lower earners because they pay more per month (lower threshold) for longer (40 years vs 30), and still end up with a write-off.