Student loan applications now open – what to know about Plan 5 before you apply

Full‑time undergraduate students in England who plan to start university in the 2026/27 academic year can now apply for student finance. You can apply even if you haven’t picked your final university yet and applications can take up to 8 weeks to process.  

When you apply, you’ll be applying for a Plan 5 student loan which works very differently to previous loans.  

This guide breaks down what Plan 5 means, what you’ll repay, how long for, and what to expect before you hit “apply”. 

What is the Plan 5 student loan? 

Plan 5 is the newest student loan system used in England. It applies to most new undergraduate students from 1 August 2023 onwards. If you start your course in 2026/27, you’ll be on Plan 5. 

You’ll be on Plan 5 if you: 

• Study an undergraduate course 

• Study a PGCE 

• Take out an Advanced Learner Loan 

When you start repaying 

You only repay your loan once you earn more than £25,000 a year. That works out to £480 a week or £2,083 a month. The Plan 5 threshold will remain frozen at £25,000 until at least 2027.  

For context, a full-time employee aged 21 years or over and working a 37.5 hours per week will make around £24,800 as of April 2026, so most graduates will likely be on at least £25,000 if they end up in a full-time job.  

How much you repay 

With plan 5, you repay 9% of anything you earn above £25,000. For example, if you earn £40,000, you repay 9% of the £15,000 above the threshold. This works out to around £1,350 a year or roughly £112.50 a month on top of your other taxes and debts.  

Here’s how Plan 5 is different to previous plans  

Plan 5 is different to previous student loan plans and, some would argue, a lot less generous. Here’s why.  

1. You repay for longer 

Your loan is wiped after 40 years, not 30 like older plans. That’s an extra 10 years of loan payments, meaning you could end up paying tens of thousands in extra payments compared to previous graduates.  

2. Lower repayment threshold than previous plans 

Plan 5 keeps its threshold at £25,000, while thresholds for Plans 1, 2 and 4 are usually higher (for 2026/27: £26,900, £29,385 and £33,795). This means more low- and middle‑income graduates start repaying sooner than previous graduates, while also paying for longer.  

3. More graduates will repay the full amount 

Government modelling suggests around 56% of graduates will repay their loan in full under Plan 5, far higher than under older systems because of the lower threshold and longer repayment window. 

4. The “graduate tax” label isn’t the full story 

You repay 9% above the threshold for up to 40 years, and the rules can change, though in practice this doesn’t happen often. It’s often sold as “just an extra tax”, but in practice, it means you’ll pay 9% more than someone who didn’t go to uni or who had independent means on anything you earn over what is effectively the full-time minimum wage.  

So, the way it works may be like a tax, but it’s an extra 9% you pay in perpetuity on a huge chunk of your income, which should be considered.  

5. Equally, it’s not a traditional loan, so it’s a lot more forgiving  

That being said, it working as more of a tax than a loan does also have its advantages. When you take out a loan, you’re expected to pay it irrespective of a change in circumstances, or you can suffer significant consequences.  

With the student loan, the situation is a lot more forgiving. You pay based on your income, and if you lose your income for whatever reason, the payments stop and there’s no penalty.