The Plan 2 Threshold Is Being Frozen Again

After four years frozen at £27,295, the Plan 2 threshold is finally moving again. It rose to £28,470 in April 2025, and rises again to £29,385 in April 2026 — two consecutive years of RPI-linked increases that push the threshold up by over £2,000.

That's genuinely positive. A higher threshold means you keep more of your salary before repayments kick in. But what comes next isn't as welcome.

In the Autumn Budget on 30 October 2025, Chancellor Rachel Reeves announced that the Plan 2 threshold will freeze at £29,385 for three years from April 2027 to April 2030. Inflation-linked rises won't resume until 2030/31.

The effect is straightforward: if your salary rises but the threshold doesn't, a bigger slice of your income sits above the line each year. Every pay rise becomes a slightly larger student loan bill — without any change to the 9% rate on your payslip.

By 2029/30, an inflation-linked threshold would be roughly £32,250. Instead it'll be £29,385 — a gap of £2,865. At £35,000, that gap costs you about £258 extra per year in repayments.

Freezing the Plan 2 threshold isn't new. It's a pattern:

• 2012–2018: Frozen at £21,000 for six years. When Plan 2 launched, the threshold was set at £21,000 and never moved. In November 2015, the government confirmed it would stay frozen until at least 2021. Theresa May reversed this in October 2017, raising it to £25,000 from April 2018.
• 2021–2025: Frozen at £27,295 for four years. After rising with average earnings for a few years, the threshold was frozen again at £27,295 from 2021/22 through 2024/25. Without this freeze, it would have been closer to £31,000 by now.
• 2027–2030: Frozen at £29,385 for three years. The threshold gets one year of growth (to £29,385 in April 2026), then freezes again.

In the 14 years since Plan 2 began, the threshold has only risen with inflation for about four of them. The rest of the time, it's been frozen.

The chart below compares three trajectories for the Plan 2 threshold from 2025/26 to 2030/31:

• Inflation-linked — if the threshold had always kept pace with RPI.
• Old policy — what was in place before the Budget (frozen at £28,470 through April 2027, then resuming RPI).
• New policy — bumped to £29,385 in April 2026, then frozen again through 2029/30.

The new policy trades a short-term bump for a longer freeze. By 2029/30, it falls well behind where an inflation-linked threshold would be.

The freeze only applies to Plan 2 (2012–23 borrowers in England and Wales) — the largest cohort. Other plans are unaffected:

• Plan 5 (2023+ borrowers): The £24,996 threshold actually starts rising with RPI from April 2027.
• Plan 1 and Plan 4: Continue annual RPI adjustments as normal.

Wales has also indicated it will not apply the freeze for Welsh Plan 2 borrowers.

On 12 March 2026, the Treasury Committee launched an inquiry into “Student Loans and Taxation of Graduates”. Chair Dame Meg Hillier framed it directly: “What we're asking is, have the goalposts been moved in a way which is unfair to graduates?”

The inquiry focuses on whether the repeated freezes — combined with Plan 2's complex interest rules — mean graduates are repaying far more than they were led to expect. The average Plan 2 balance is £43,645, compared to £10,252 for Plan 1 borrowers.

The evidence deadline is 14 April 2026, and anyone over 16 can submit their experience. The outcome could shape future threshold policy.

The numbers above use a £35,000 salary as an example. To see what the freeze means at your income, try the repayment calculator — set threshold growth to 0% to model the freeze, or 3% for inflation-linked growth.