Student loan Plan 2 repayments

If you are on Plan 2, you repay 9% of your earnings above £29,385 a year in 2026/27, which is £2,448.75 a month or £565.09 a week through payroll. The threshold is held at £29,385 until the end of 2029-30, so as pay awards lift salaries over the next few years, more of your pay will sit above it and repayments will rise. Interest is added to the balance at a rate that depended on income, from 4.1% up to a 6% cap, on gov.uk at the time of checking.

Who is on Plan 2

Plan 2 covers students from England and Wales who started undergraduate courses after the old Plan 1 system ended. In England it was later replaced by Plan 5 for new students. Most nurses, midwives, paramedics, teachers and allied health professionals who trained in England or Wales in the last decade or so will be on Plan 2. The exact start dates are on gov.uk under “which repayment plan you are on”.

Advanced Learner Loans for further education courses are also repaid on the Plan 2 terms, once the course ends.

What it costs on public sector salaries

All figures are for 2026/27, full-time, assuming Plan 2 only and steady monthly pay.

Salary	Example post	Over £29,385	Per year	About a month
£32,073	NHS band 5 entry, England	£2,688	£241.92	£20
£34,069	Teacher M1, England outside London	£4,684	£421.56	£35
£39,959	NHS band 6 entry, England	£10,574	£951.66	£79
£56,515	NHS band 7 top, England	£27,130	£2,441.70	£203

Someone earning £29,385 or less in a year repays nothing over the year, though a month with overtime or arrears can still trigger a deduction. Many healthcare assistants on band 2 or 3, and support staff on the lower NJC pay points, are below the threshold. NHS band 5 pay and jobs shows where a newly qualified nurse starts.

The frozen threshold

Holding the threshold at £29,385 until the end of 2029-30 has a direct effect on take-home pay. Each pay award adds to your salary while the threshold stays still, so 9p of every extra pound above it goes to your loan. Combined with 20% income tax and 8% National Insurance, a basic-rate Plan 2 borrower keeps 63p of each extra pound of pay, before pension contributions. A higher-rate taxpayer keeps 49p (40% tax, 2% NI, 9% loan).

This is worth knowing when you look at the value of a pay rise or an extra shift. How much of a pay rise do you actually keep? works through examples, and the take-home pay calculator has a Plan 2 option.

How it is worked out each payday

The deduction is calculated on gross pay for each period on its own. On monthly pay of £3,330 (a salary of £39,960), the calculation is £3,330 minus £2,448.75 = £881.25, and 9% is about £79.

A month with heavy overtime, bank shifts or back pay produces a larger deduction. A month of unpaid leave or half-pay sickness may produce none. If your total income for the tax year ends up below £29,385, you can ask the Student Loans Company to refund the repayments.

NHS, teachers’ and local government pension contributions do not reduce the pay used for the calculation. Salary sacrifice does.

Interest and the balance

Interest is added to the balance each month and does not come out of your pay. On Plan 2 the rate depends on your income, between 4.1% and a 6% cap on gov.uk at the time of checking. Rates change during the year, so check the current figure before you rely on it.

Many Plan 2 borrowers will not repay the full balance before the loan is written off. Whether that applies to you depends on your future earnings, which nobody can predict with certainty. The Student Loans Company can explain your balance and repayment history, and independent money guidance services can explain the general trade-offs of overpaying.

When Plan 2 is written off

Plan 2 loans are cancelled after a set number of years from the April after you were due to start repaying, and also on death or if you are permanently unable to work because of disability. The exact period is on the gov.uk page about when student loans are written off, and your Student Loans Company account shows your expected date. Unpaid balances at that point are cancelled, not passed on.

Plan 2 with other loans

With a Postgraduate Loan as well, you repay 9% above £29,385 and also 6% above £21,000. On £32,073 that means £241.92 on Plan 2 plus £664.38 on the Postgraduate Loan, about £906 in total. If you also have a Plan 1 loan from an earlier course, you repay 9% in total above the Plan 1 threshold of £26,900, split between the two. Student loan repayments from salary sets out every combination.

If your payslip shows the wrong plan, tell payroll and the Student Loans Company. Being treated as Plan 1 instead of Plan 2 costs a full-time band 5 nurse more than £200 a year in extra deductions.