Plan 2 student loans apply to English and Welsh students who started university between September 2012 and July 2023. The repayment threshold for 2025/26 is £27,295 per year. You repay 9% of everything you earn above this threshold.
On a £35,000 salary, your annual repayment is £693 (9% of £7,705), which is £58 per month. On a £40,000 salary, you repay £1,143 per year or £95 per month. On a £50,000 salary, it increases to £2,043 per year or £170 per month.
The interest rate on Plan 2 loans is significant. While studying, it is RPI plus 3%. After graduating, it ranges from RPI to RPI plus 3% depending on your income. At incomes above £49,130, you pay the maximum rate.
The uncomfortable truth is that most Plan 2 graduates will never repay their loan in full. The average graduate leaves university owing around £45,000. With interest rates often exceeding repayment amounts, the balance frequently grows rather than shrinks in the early years of your career.
Plan 2 loans are written off after 30 years from the April after you graduate. For someone who graduated in 2015, this means the loan is written off in April 2046 regardless of the remaining balance.
Should you make voluntary overpayments? For most graduates, voluntary overpayments are not worth it. If you are unlikely to repay the loan in full within 30 years, extra payments are wasted money. However, if you are a high earner likely to repay the full balance, overpaying can save you thousands in interest.
Use our student loan calculator to see your monthly repayments and whether you will repay your loan before it is written off.