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What will your student loan really cost?
Plan 5 explained with your own numbers: 9% of everything you earn over £25,000, for up to 40 years. The headline balance isn't the number that matters. This is. Drag the sliders and watch what actually changes.
Your repayment
£38/mo
at your starting salary
Total you'll repay
£115,862
cleared in 35 years
Interest accrued
£70,862
at 4.3% a year
Written off at 40 yrs
£0
you clear it first
Balance over the life of the loan
hover for year-by-year detail
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Illustration only, not financial advice. Assumes Plan 5, 4.3% interest and a frozen £25,000 threshold. Real thresholds and RPI move each year.
What this means
A Plan 5 student loan works nothing like a bank loan. There are no monthly bills, no credit checks and no debt collectors: repayments come off your payslip automatically, and only when you earn over £25,000 a year. Earn less, pay nothing. That’s why many people describe it as a 9% graduate tax on income above the threshold rather than a debt.
The balance and the interest rate matter far less than you’d think, because most graduates never repay in full. Whatever is left 40 years after you were first due to repay is written off completely. It doesn’t follow you, and it never appears on your credit file. What decides your total cost is your salary path, not the number on the statement.
That’s also why overpaying early deserves real thought. If your projection shows a chunk being written off, voluntary overpayments are money you may never have needed to hand over. Only graduates on track to clear the loan well before year 40 tend to benefit from paying it down faster, so check the annotation on your chart before you decide.
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