A Plan 5 student loan is a repayment plan for some undergraduate student loans in England. If you are on Plan 5, you repay 9% of your income above £25,000 in the 2026/27 tax year. You do not repay a flat monthly amount. The deduction rises and falls with your pay.
For most employees, repayments are taken automatically through PAYE. That means your employer deducts student loan repayments from your wages in the same way they deduct Income Tax and National Insurance. If your income drops below the repayment threshold, your deduction can stop for that pay period.
Who is on Plan 5 student loan?
Plan 5 usually applies to newer undergraduate borrowers in England. It is not the same as Plan 1, Plan 2, Plan 4 or Postgraduate loans. The plan you are on depends on when and where you studied, not on your current salary.
For England, Plan 5 is largely determined by when you started your course.
If you started an undergraduate course on or after 1 August 2023, you’re generally on Plan 5. If you started between 1 September 2012 and 31 July 2023, you’re generally on Plan 2.
So, for example:
Started university in 2020 → Plan 2
Started university in 2023/24 → Plan 5
Started university in 2024 → Plan 5
It also depends on where you applied for student finance. Scotland uses Plan 4, while Northern Ireland uses Plan 1.
If you are not sure which plan applies to you, check your student loan account or official loan paperwork. Your payslip may also show that a student loan deduction is being taken, but it will not always make the plan type obvious on its own.
How much do you repay on Plan 5 student loan?
In 2026/27, Plan 5 repayments are 9% of earnings above £25,000 a year. Only income above that threshold is used for the calculation. You do not pay 9% of your full salary.
Annual threshold: £25,000
Repayment rate: 9% of earnings above the threshold
Applies through PAYE for most employees
Can also apply through Self Assessment if relevant
A simple annual example: if you earn £30,000, the part above the threshold is £5,000. Nine per cent of £5,000 is £450 for the year. If you earn £40,000, the part above the threshold is £15,000, so the annual repayment is £1,350.
In practice, payroll usually works from pay-period thresholds rather than the full annual figure. So your monthly deduction can vary if your pay changes, you get overtime, or you receive a bonus.
What is the Plan 5 student loan threshold in 2026/27?
The Plan 5 threshold for 2026/27 is £25,000 a year. You start repaying when your income goes above that amount. If your earnings are below it, no Plan 5 repayment is due for that income.
This threshold is lower than some other student loan plans. That means Plan 5 deductions can start at a lower income level than Plan 2 or Plan 4. If you are comparing offers or checking a pay rise, that can make a visible difference to your take-home pay.
How does Plan 5 student loan show on your payslip?
Plan 5 repayments usually appear as a separate deduction on your payslip. It may be labelled simply as student loan rather than spelling out Plan 5 in full. The exact wording depends on your payroll software and employer.
The key point is that student loan deductions are separate from Income Tax and National Insurance. They reduce your take-home pay, but they are not a tax band and they do not change your tax code. If the deduction looks wrong, it is worth checking your plan type and income details first.
How is Plan 5 different from Plan 1, Plan 2 and Plan 4?
The main difference is the repayment threshold. In 2026/27, Plan 5 uses a £25,000 annual threshold. Other plans use different thresholds, so two people on the same salary can have different student loan deductions.
Plan 1 threshold: £26,900
Plan 2 threshold: £29,385
Plan 4 threshold: £33,795
Plan 5 threshold: £25,000
Postgraduate loan threshold: £21,000
All the undergraduate plans above use a 9% repayment rate on income above their own threshold. Postgraduate loans are separate and use 6% above £21,000. In some cases, a borrower can repay both an undergraduate loan and a postgraduate loan at the same time, which increases total deductions.
Do you repay Plan 5 student loan through PAYE or Self Assessment?
Usually, employees repay through PAYE. Your employer deducts the amount before you are paid. If you are self-employed, or you need to complete a tax return for another reason, repayments can also be collected through Self Assessment.
What matters is your income for repayment purposes, not whether you choose to make manual payments each month. For most people in employment, the process is automatic once the correct plan is on record.
Does paying off a Plan 5 student loan work like normal debt?
Not really. Plan 5 repayments are income-based. You repay according to what you earn above the threshold, not according to a lender-set monthly minimum based on your balance. That makes it feel different from a credit card, personal loan or car finance agreement.
This is why a higher salary increases your deduction even if your loan balance has not changed much, and a lower salary can reduce or stop repayments for that period. The balance still matters overall, but your day-to-day payroll deduction is driven by earnings first.
How much does Plan 5 reduce your take-home pay?
It depends on your salary and pay pattern. The deduction is 9% of earnings above £25,000, so the effect grows gradually as income rises. It can be small at lower earnings and more noticeable as your salary moves further above the threshold.
Because student loan deductions sit on top of Income Tax and National Insurance, they are easy to miss when you look only at headline salary. If you want the practical number, it is best to run your gross pay through a take-home pay calculator with the right loan plan selected.
When should you check your Plan 5 student loan deduction?
Check it when you start a new job, get your first payslip after graduation, receive a large pay rise, or notice an unexpected deduction. Payroll errors are not unique to student loans, and the wrong plan type can change your take-home pay.
You should also check if you have more than one source of income or if you complete a tax return. Student loan repayments can interact with different pay arrangements, and it helps to understand which deductions are coming through payroll and which may be picked up later.
What should you remember about Plan 5 student loan?
Plan 5 is a UK student loan repayment plan for some newer undergraduate borrowers in England
In 2026/27, the threshold is £25,000 a year
You repay 9% of earnings above £25,000
Repayments usually come through PAYE if you are employed
The amount taken depends on your income, not a fixed monthly bill
Different student loan plans have different thresholds, so deductions can vary a lot between borrowers