Students who started their undergraduate and advanced learner loan courses on or after 1 August 2023 will fall into the new Plan 5 payment plan bracket.

From April 2026, students who fit in the Plan 5 criteria will begin repaying their student loan, which is why it’s important you understand the new plan and how it will work.

How will the new Plan 5 payment structure work?

The Plan 5 payment structure will have three specific thresholds and if an employee’s income matches those, they will be required to start paying off their student loan.

The thresholds for Plan 5 are £25,000 per annum, £2,083 per month and £480 a week. If any are met, loan payments will be automatically deducted from their pay.

Should your income fall below the thresholds in place, the Student Loans Company (SLC) will automatically stop taking payments.

Once they return to that threshold, the SLC will begin to take payments once again.

How will employees be charged?

Under Plan 5, there will be a nine per cent charge on their income, which is collected through their payroll or via Self Assessment, if they are classed as self-employed.

Should they receive a pay increase, for example, this will be reflected in the figure collected.

So, if they are in the Plan 5 bracket and earn £28,000 per annum, they can expect a deduction of £22 per month to be taken out to pay student loan costs.

If their pay were to increase to £31,000 per annum, the monthly deduction would increase to around £45 per month to reflect the salary increase.

How we can help

Whether you are an employee or an employer, you need to understand the new payment structure taking effect and our team is here to advise and help.

We can talk you through all the student loan categories, including Plan 5 and help you put measures in place to manage the changes coming into effect.

For expert advice on managing your payroll obligations, including ensuring the correct student loan payments are made, please get in touch with our team.