What Is a Plan 2 Student Loan?
Plan 2 covers English and Welsh students who started university between September 2012 and July 2023 — the £9,000-plus tuition fee generation. You repay 9% of income above £29,376 a year, and interest runs on a sliding scale up to RPI + 3%, which is exactly why Plan 2 middle earners so often repay more than anyone else.
Plan 2 at a Glance
- Who
- England & Wales
- 2012-2023
- Repayment threshold
- £29,376/yr
- £2,448/mo
- Repayment rate
- 9%
- of income above threshold
- Interest
- RPI to RPI + 3% (income-based)
- 3.2%–6.2% now
- Written off after
- 30 years
What Plan 2 means
A Plan 2 student loan is repaid at 9% of your income above £29,376 a year (£2,448 a month). Unlike Plan 1, interest is income-based: it climbs from RPI up to RPI + 3% as your salary rises.
Any balance still outstanding 30 years after you were first due to repay is written off. But because of the high interest, most Plan 2 borrowers never reach a zero balance through minimum repayments alone.
Who is on Plan 2?
You are on Plan 2 if you are an English or Welsh student who started an undergraduate course between 1 September 2012 and 31 July 2023.
English students who started from September 2023 onwards are on Plan 5 instead. Welsh students who started after August 2023 stay on Plan 2, because Plan 5 is England-only.
Not sure this is you? Take the 3-question which plan quiz to confirm.
Plan 2 interest rate
Plan 2 interest is charged on a sliding scale. While you are studying, and on income up to £29,376, you pay RPI (3.2%). Between £29,385 and £52,885 the rate rises linearly, reaching RPI + 3% (6.2%) once you earn £52,885 or more.
That RPI + 3% ceiling is the single biggest reason Plan 2 is so expensive: the balance can grow faster than a typical borrower repays it, so the debt keeps compounding for years.
From September 2026 the government is capping Plan 2 interest at 6% — see our Plan 2 interest rate cap guide for what changes.
For a full walkthrough of how student loan interest compounds, read how student loan interest works.
How Plan 2 compares to other plans
Plan 2 has a higher threshold than Plan 1 (£26,892) or Plan 5 (£24,996), so you repay less each month at the same salary — but its RPI + 3% interest ceiling makes it the most expensive plan for middle earners, more than offsetting the shorter 30-year term versus Plan 5's 40 years.
| Plan | Who & when | Threshold | Rate | Interest | Write-off |
|---|---|---|---|---|---|
| Plan 1 | England, Wales & N. IrelandPre-2012 (all years for NI) | £26,892 | 9% | Lower of RPI or base rate + 1%3.2% now | 25 yrs |
| Plan 2 | England & Wales2012-2023 | £29,376 | 9% | RPI to RPI + 3% (income-based)3.2%–6.2% now | 30 yrs |
| Plan 4 | ScotlandAll years | £33,792 | 9% | Lower of RPI or base rate + 1%3.2% now | 30 yrs |
| Plan 5 | England2023+ | £24,996 | 9% | RPI only3.2% now | 40 yrs |
| Postgraduate Loan | UK-wideAll years | £21,000 | 6% | RPI + 3%6.2% now | 30 yrs |
See the full breakdown on the UK student loan plans hub or read the in-depth Plan 2 vs Plan 5 comparison.
Why middle earners feel Plan 2 the most
Plan 2 is the clearest example of the middle-earner trap. Low earners repay little and reach the 30-year write-off with plenty forgiven; high earners clear the balance fast before much interest builds. It is the middle — graduates earning enough to make real repayments, but not enough to outrun RPI + 3% interest — who repay the most in total, often far more than they originally borrowed.
Middle earners repay the most across every UK plan — enough to make real repayments, but not enough to clear the balance before interest bites. Put your own salary into the student loan repayment calculator to see exactly where you fall.
Plan 2 FAQs
- What is a Plan 2 student loan?
- Plan 2 is a UK undergraduate loan for English and Welsh students who started between September 2012 and July 2023. You repay 9% of income above £29,376 a year, interest runs from RPI (3.2%) up to RPI + 3% (6.2%) depending on income, and any balance is written off after 30 years.
- What is the Plan 2 repayment threshold?
- The Plan 2 threshold is £29,376 a year (£2,448 a month) — the highest of the England/Wales undergraduate plans. You repay 9% of everything above it.
- What is the Plan 2 interest rate?
- Plan 2 interest is income-based, from RPI (3.2%) at or below £29,385 up to RPI + 3% (6.2%) at £52,885 or more, interpolated in between. A separate cap can lower the headline rate when market rates are low.
- Why do Plan 2 middle earners repay the most?
- Because Plan 2 interest reaches RPI + 3%, middle earners repay steadily but not fast enough to stop the balance compounding, and they earn too much for the 30-year write-off to help. High earners clear the loan quickly; low earners have it written off — so the middle pays the most in total.