Interest on a Plan 5 loan is added to your balance from the day the first payment is made to you or your university, until the loan is repaid or cancelled. It is added every month. It does not change your monthly repayment, which depends only on your income, but it does decide how fast the balance falls and whether anything is left to be written off.
Plan 5 interest is normally the Retail Price Index (RPI), a measure of inflation, with nothing added on top. It is set on 1 September each year using RPI from the previous March. GOV.UK's repayment pages currently show 4.1% for Plan 5.
That is different from Plan 2, which charges RPI plus 3% while you study and RPI plus up to 3% afterwards depending on income, with a current cap of 6%. On Plan 5 everyone pays the same rate whatever they earn.
Since December 2023 the Department for Education has compared Plan 2, Plan 5 and Postgraduate Loan rates with comparable market rates every month. If the student loan rate is higher than the comparable market rate (based on Bank of England data on unsecured personal loans), the rate is capped for at least a month. The SLC's Plan 5 interest page says the cap is not currently being applied to Plan 5.
The SLC publishes past rates. These are some of the periods it lists:
| Period | Plan 5 interest |
|---|---|
| 1 September 2025 to 31 August 2026 | 3.2% |
| 1 September 2024 to 31 August 2025 | 4.3% |
| 1 August 2024 to 31 August 2024 | 8% |
| 1 June 2024 to 31 July 2024 | 7.9% |
| 1 September 2023 to 30 November 2023 | 7.3% |
| 1 August 2023 to 31 August 2023 | 7.1% |
The high rates in 2023 and 2024 followed high inflation, and the month-by-month changes in that period were the cap at work.
As a rough guide, at 4.1% a balance of £45,000 attracts about £1,845 of interest over a year (interest is added monthly, so the real figure varies slightly with timing). At £35,000 a year on Plan 5 you repay £900.00 a year, so in that example the balance still grows. At £60,000 you repay £3,150.00, which is more than the interest, so the balance falls.
This is why a growing balance in the first years of repayment is common and is not a sign that anything has gone wrong. Whether it matters depends on whether you would ever repay it all before the 40-year write-off.
GOV.UK's repayment pages currently show these rates:
| Plan | Current interest (GOV.UK) |
|---|---|
| Plan 1 | 4.1% |
| Plan 2 | 4.1% to 6%, depending on income after study |
| Plan 4 | 4.1% |
| Plan 5 | 4.1% |
| Postgraduate Loan | 6% |
Interest starts from the first payment of the loan, which is often years before repayments begin. A student on a three-year course has interest added throughout the course and until their first repayment, so the opening balance on their first statement is usually higher than the total of the loans paid out. That is expected and is shown on your annual statement.
GOV.UK says interest is still added even if you are not working or your income is below the threshold. So a career break, part-time work or time out of the workforce adds to the balance without adding repayments.
For Plan 5 borrowers overseas, the SLC says that if you do not keep your employment details up to date, it expects a fixed monthly repayment for the country you live in and you may be charged the highest rate of interest on your balance. Keeping your details current avoids this. See Plan 5 if you move abroad.
Your annual statement shows how interest has been applied. GOV.UK says it is normally available in your online repayment account by the end of August.
The calculator uses 4.1% every year, the rate GOV.UK currently shows, to project the balance and the total repaid. Real rates move each September, so the long-run figures are illustrations. Your monthly repayment estimate does not depend on interest at all.
Sources: SLC: how interest is calculated, Plan 5 · GOV.UK: how much you repay (interest) · SLC: how interest is calculated, Plan 2 · DfE: interest rate cap for Plan 2, Plan 5 and Postgraduate loans · SLC: overseas thresholds for Plan 5. Checked 29 October 2026.
Last checked: 29 October 2026. Estimates only, not financial advice.
No. Your monthly repayment depends only on your income. Interest is added to the balance.
It is usually set on 1 September each year from the previous March's RPI, and it can be capped in any month if it is above comparable market rates.
No. Unlike Plan 2, Plan 5 has one rate for everyone regardless of income.