New Student Loan Plan 5 Explained: What It Means for Payroll from April 2026
New Plan 5
There is a new student repayment plan, Plan 5, for Student Finance England, whereas Student Finance Wales, Student Awards Agency Scotland, and Student Finance Northern Ireland remain the same. Currently, there are 3 student loan repayment plan types 1, 2 and 4. There is also the postgraduate loan plan. The earliest repayments will start for the Plan 5 is 6th April 2026. This new student loan repayment plan is available to students who started their course from August 2023 onwards and will have a lower repayment threshold and a longer repayment period than other plan types. The default plan type to use when an employee does not know their student plan type will be Plan 5 from 6th April 2026. An employee can only be on one plan type at a time, Plan 1, 2, 4 or Plan 5. Postgraduate Loan is the only plan type that can be deducted at the same time as the others.
What repayment plan should you be on?
Repaying your student loan: Which repayment plan you're on - GOV.UK
Which student loan plan type you are on is dependent on where you applied for student loan, when you started your course and what type of course you studied.
Student Finance England:
Plan 5 – if you started your undergraduate course, postgraduate certificate of education or take an out an advanced learner loan on or after 1st August 2023.
Plan 2 – If you’re studying an undergraduate course, a postgraduate certificate of education, take out an advanced learner loan between 1st September 2012 and 31st July 2023. If you take out a higher education short course loan on or after 1st September 2012.
Plan 1 – If your course started before 1st September 2012.
Postgraduate Loan – if you’re studying a postgraduate master’s or doctoral course.
Student Finance Wales:
Plan 1 – If your course started before 1st September 2012.
Plan 2 – If you studied an undergraduate course or a postgraduate certificate of education on or after 1st September 2012.
Postgraduate Loan – if you’re studying a postgraduate master’s or doctoral course.
Student Awards Agency Scotland:
Plan 4 – You are on Plan 4 whether you studied an undergraduate course or a postgraduate course.
Student Finance Northern Ireland:
Plan 1 – You are on plan 4 whether you studied an undergraduate course or a postgraduate course.
When do you start repaying student loan?
You only make student loan repayments if your income is over the threshold amount for your repayment plan. This threshold changes on 6th April every year. If you receive a bonus or overtime payment that puts your monthly or weekly income over the threshold but discover that at the end of the tax year you are below the annual threshold, then you can ask for a refund. The earliest you start repaying is the April after you leave your course or the April 4 years after the course started if you’re studying part-time and your course is longer than 4 years. Plan 5 will only commence repayments from April 2026.
What are the thresholds for each student repayment plan?
Plan 1 – Repayments occur when income is over £501 a week, £2172 a month or £26,065 a year.
Plan 2 - Repayments occur when income is over £547 a week, £2,372 a month or £28,470 a year.
Plan 4 - Repayments occur when income is over £629 a week, £2,728 a month or £32,745 a year.
Plan 5 – Repayments occur when income is over £480 a week, £2,083 a month or £25,000 a year.
Postgraduate Loan – If you took out a Master’s Loan or a Doctoral Loan, repayments occur when income is over £403 a week, £1,750 a month or £21,000 a year.
How much will you repay?
For all plan types except Postgraduate Loan, you will pay 9% of your income over your plan’s earnings threshold. For Postgraduate Loans you will pay 6% of your income over the threshold. If you have multiple jobs, then you will pay student loan based on each job’s income not total income. You can have any of the student loan plan types and a postgraduate loan and the thresholds and same percentages apply, e.g Plan 2 would have a weekly threshold of £547, and you would pay 9% of income based on earnings above the threshold. If you also have a Postgraduate Loan, then you would pay 6% of income over the weekly threshold of £402.
How much interest does your plan type have?
The interest rate for Plan 1, 4 and 5 is 4.3%.
The interest rate for Postgraduate Loan is 7.3%
The interest rate for Plan 2 is 7.3% whilst you are still studying and then it will change the 6th April after you have finished the course or the 6th April 4 years into your course if you’re studying a part time course taking more than 4 years. After the above period of time your interest is dependent on your annual income. When you earn £28,470 or less it is 4.3%, when you earn between £28,471 to £51,245 then your interest can be 4.3% plus up to 3% and then when you are earning £51,245 you will have 7.3% interest.