Thresholds and interest for 2026/27
| Plan | Threshold (year) | You repay | Interest from Sept 2026 | Written off after |
|---|---|---|---|---|
| Plan 1 | £26,900 | 9% above it | 4.1% | 25 years |
| Plan 2 | £29,385 | 9% above it | 4.1% to 6% (capped) | 30 years |
| Plan 4 (Scotland) | £33,795 | 9% above it | 4.1% | 30 years |
| Plan 5 | £25,000 | 9% above it | 4.1% | 40 years |
| Postgraduate Loan | £21,000 | 6% above it | 6% (capped) | 30 years |
Interest is based on the Retail Price Index for the previous March, 4.1% for the year from 1 September 2026. Plan 2 adds up to 3% more depending on income: RPI only at or below £29,385, the full RPI + 3% at £52,885 and above, in proportion between. For 2026/27 the government has capped Plan 2 and Postgraduate interest at 6%. Plan 1 written-off periods apply to loans taken out from September 2006; older Plan 1 loans are written off at 65.
How repayments work
Repayments are not based on what you owe. They are 9% of everything you earn above your plan's threshold (6% for a Postgraduate Loan), taken through PAYE like tax. On a £40,000 salary on Plan 2: 9% × (£40,000 − £29,385) = £955.35 a year, or £79.61 a month. If you earn below the threshold you pay nothing, and whatever is left when the write-off date arrives is cancelled.
That same Plan 2 borrower with a £45,000 balance is charged interest at 4.1% + 3% × (£10,615 ÷ £23,500) = 5.46%, about £2,455 a year, far more than they repay. Their balance keeps growing for years, which matters less than it looks: what they actually pay depends only on their salary and how long they pay for.
If you have more than one plan, you repay 9% over the lowest threshold of your plans, split between them, plus 6% for a Postgraduate Loan on top.
Is it worth overpaying?
Only if you are likely to clear the loan before it is written off. For many Plan 2 and Plan 5 borrowers on average salaries, the loan will be written off with a balance left, so every extra pound paid is a pound they would never have had to pay. High earners who will clear it anyway save interest by overpaying, but that money might still do more in a pension (with tax relief) or paying off more expensive debt. The overpay comparison above runs both cases on your numbers.
Changes to watch
The Plan 2 repayment threshold rises to £29,385 in April 2026 and is then frozen for three years from April 2027, so more of each pay rise goes on repayments until it rises with RPI again from April 2030. The calculator applies the freeze. Plan 1 and Plan 4 thresholds rise with RPI each April, and the Plan 5 threshold of £25,000 starts rising with RPI from April 2027.