Plan 5 Student Loan Repayments Begin for First Cohort; New Threshold Takes Effect
Students who started university in August 2023 or later are now making their first repayments on Plan 5 student loans from April 2026, with a £25,000 annual repayment threshold. Interest is set at RPI only (4.1% until August 2027).
The first cohort of Plan 5 student loan borrowers—English undergraduates who began courses on or after 1 August 2023—started making repayments in April 2026. This represents the first live repayment cycle for the newly reformed Plan 5 scheme, which differs significantly from earlier loan plans in structure, interest rates, and repayment terms.
Plan 5 Key Features
- Repayment threshold: £25,000/year (£2,083/month, £480/week)
- Repayment rate: 6% of income above the threshold
- Interest rate: RPI only (4.1% until 31 August 2027)—no additional "real interest" component
- Loan cancellation: 40 years after first repayment due (longer than Plan 2's 30 years)
- Earnings tracking: Repayments automatically adjust if salary rises or falls
For newly graduated international students with valid work visas, or UK citizens who studied abroad and returned, the Plan 5 scheme offers lower interest than older plans but requires repayment as soon as earnings exceed £25,000. If you're earning below that threshold, no repayment is due even if you have a loan. Plan 5 borrowers earning £30,000 will repay £300/year (6% of £5,000 above threshold); at £35,000, that rises to £600/year. Expat professionals returning to the UK or international graduates securing UK employment should register with the Student Loans Company immediately to ensure correct PAYE deductions, as repayments are now being tracked through employer payroll.
Sources
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