Plan 5 student loans: what prospective students need to know

If you’re starting university from 2026 onwards, the student loan system you’re signing up to is not the same one your parents encountered, and not even the same one recent most graduates are on.

It’s called Plan 5, and it quietly changes how much you repay, how long you repay for, and who ends up paying the most.

I’ve been getting a lot of questions since posting my recent video on this. Things like:

“Is it really 40 years?”
“Who actually pays the most overall?”
“Is it basically a graduate tax?”
“Should parents be helping more upfront?”

Here’s the full picture, in plain English.

First, how Plan 5 repayments work

Under Plan 5, you repay 9% of anything you earn over £25,000.

That threshold is lower than previous systems, which means repayments start earlier in your career.

Some simple examples, using today’s threshold:

• Earn £30,000 and you repay roughly £37 a month
• Earn £40,000, and it’s closer to £112 a month
• Earn £50,000, and you’re looking at around £187 a month

Repayments are taken automatically through PAYE, like tax.

If your income drops below £25,000, repayments stop. If you take time out, earn less, or change careers, repayments adjust. This is why people say it doesn’t behave like a normal loan.

The biggest change: how long you repay for

This is the part many people miss.

Under Plan 5, loans last for 40 years from the point you become eligible to repay. Previous systems were written off after 30 years.

That extra decade means many graduates will still be making repayments well into their 50s or 60s, depending on when they start earning above the threshold.

Even if you never clear the balance, you can still end up paying for decades.

What about interest?

Plan 5 interest is linked to inflation (RPI) only. That sounds kinder than older plans, which added inflation plus up to 3%. But the system is still designed so that more people repay more of the loan, rather than having it written off. Lower repayment thresholds plus a longer repayment term do a lot of the heavy lifting here.

The question I get most: how much could you repay in total?

This is where Plan 5 really bites. Most students will graduate with a starting loan somewhere between £45,000 and £60,000, once tuition fees and maintenance loans are combined.

Under Plan 5, the people likely to repay the most overall are not the highest earners. They are middle earners.
Someone earning roughly £35,000 to £45,000 for much of their working life could easily repay £80,000 to £120,000 over 40 years.
That is often two times or more what they originally borrowed.

Why?
They earn enough to repay consistently.
But not enough to clear the loan quickly.
So repayments drag on for decades.

Who benefits from Plan 5?

High earners who move quickly into well-paid careers. They repay more each month, but for fewer years, which can reduce the total cost.

Those on shorter or cheaper courses will benefit from lower borrowing upfront, which makes a big difference over 40 years.

Who loses out?

Middle earners lose out the most.

Think teachers, nurses, engineers, and professionals on steady but unspectacular pay. They repay earlier, repay for longer, and often repay the most in cash terms.

Lower earners may never clear the balance, but once they cross £25,000, they can still be paying something for decades.

So what should students and parents actually consider?

• 1. This is not a normal debt

It does not affect your credit score, and repayments are income-dependent. But it is also not free money. For many, it functions like a long-term graduate tax.

• 2. Course choice and cost matter more than ever

Longer courses and higher living costs significantly increase the lifetime cost under Plan 5.

• 3. Salary outcomes matter

If a degree does not materially improve earning potential, the maths becomes much harder to justify under this system.
This does not mean university is “not worth it”, but it does mean the financial trade-offs need to be understood upfront.

Final thought

Plan 5 quietly shifts more of the cost of university onto ordinary, middle-income graduates.

Repayments start earlier, they last longer, and for many people, the total cost is far higher than they expect.

This needs to be part of the decision-making process before students sign up, not something they discover ten or twenty years later.