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What is the difference between plan 1, plan 2 and plan 4 student loans?

Plan 2 refers to a student loan taken out from September 2012 onwards, in England or Wales. Older loans (from England or Wales) and loans taken out in Northern Ireland, are called plan 1 loans. Loans taken out in Scotland are called plan 4 loans.

There is a newer type of student loan, called plan 5, which includes most loans taken out in England from August 2023 onwards. Repayment of these loans is not due to start until April 2026 so they do not yet cause payroll deductions.

The interest rate, which is usually higher for plan 2, doesn't affect payroll. For payroll purposes, the differences are that an employee with a plan 2 or plan 4 loan can earn more before their loan repayments start, and the repayments are lower. Our system works out the repayments for you, provided you choose the correct plan.

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