Plan 5 vs Plan 2 loans
Plan 5 applies to new English undergraduate borrowers from 2023. It has a lower repayment threshold than Plan 2 and a longer 40-year write-off period, but interest is linked to RPI rather than RPI plus an additional real interest rate.
When do you start repaying?
Repayments are based on income, not the size of the debt. Under Plan 5, graduates repay 9% of earnings above £25,000. If earnings are below the threshold, no repayment is due.
Is university worth the cost?
The answer depends on the course, career path, earnings premium, and non-financial value of the degree. For many graduates, student loan repayments act more like a time-limited graduate tax than a normal commercial debt.