The UK student loan system is undergoing its biggest overhaul in a decade. If you’re a student, recent graduate, or planning to attend university, these changes affect how much you’ll pay and for how long.
What Changed
The new repayment system (Plan 5) applies to students starting courses from September 2026 onwards. Existing borrowers remain on their current plans.
| Feature | Old Plans (1/2/3/4) | New Plan 5 |
|---|---|---|
| Repayment threshold | Varies (£27,295–£31,000) | £30,000 |
| Repayment rate | 9% above threshold | 9% (unchanged) |
| Interest rate | Up to RPI + 3% | RPI only (no markup) |
| Write-off period | 25–30 years | 40 years |
| Loan amount cap | Tuition + maintenance | Tuition + maintenance (unchanged) |
Key Changes
Lower Interest (Good)
Under the old system, interest rates could reach RPI + 3%, meaning your debt grew faster than inflation. Plan 5 caps interest at the Retail Price Index (RPI) rate only. That’s typically lower and means your balance grows less aggressively.
Longer Repayment Term (Bad)
The write-off period increases from 25–30 years to 40 years. You’ll be repaying well into your 50s. This affects everyone, including low earners. The government says this makes the system more progressive — but it also means higher-earning graduates pay more over their lifetimes.
Fixed Threshold (Mixed)
The £30,000 threshold is higher than most current plans, so new graduates earn a bit more before repayments kick in. However, unlike some older plans, it’s not automatically adjusted for inflation. Over time, more of your income will be captured as wages rise.
Who Is Affected
- Current students (before Sep 2026): No change — you stay on your existing plan
- New students (from Sep 2026): Plan 5 applies
- Graduates already repaying: No change
- Mature students and part-time learners: Same rules apply
How to Calculate Your Repayments
Under Plan 5:
- Earn under £30,000: Pay nothing
- Earn £40,000: Pay 9% of (£40,000 – £30,000) = £900/year (£75/month)
- Earn £55,000: Pay 9% of (£55,000 – £30,000) = £2,250/year (£187.50/month)
After 40 years, any remaining balance is written off.
Is It Still Worth Going to University?
Despite the longer repayment term, the Institute for Fiscal Studies estimates that graduates still earn substantially more over their lifetimes than non-graduates. But the gap narrows for lower-earning degrees.
Consider:
- Some degrees (medicine, law, engineering) still have excellent returns
- Others (some arts, communications) may not justify the cost
- Apprenticeships and vocational routes are increasingly viable alternatives
What Smart Students Will Do
- Only borrow what you need — Take the minimum maintenance loan if you can
- Overpay strategically — Only if you’re likely to repay fully within 40 years (high earners)
- Track your balance — Use the official student loans repayment calculator
- Consider employer sponsorship — Some companies offer tuition support
Bottom Line
Plan 5 is worse for high earners (40 years of repayments) but better for low earners (RPI-only interest). The system is still generous compared to most countries — you pay 9% of income above a threshold, and the balance is eventually written off. University remains a good investment for most, but the calculation is less straightforward than it used to be.