Plan 2 Student Loan Write-Off: When Is It Written Off?

The 30-year write-off rule

Your Plan 2 loan enters repayment from the April after you graduate or leave your course. The 30-year clock starts from that April. Any remaining balance — regardless of how large — is cancelled at the end of the 30-year period.

For example: if you graduated in July 2015, your loan entered repayment in April 2016. The balance will be written off in April 2046.

Will you repay in full or have it written off?

This depends on three factors: your starting balance, your lifetime earnings trajectory, and the interest rate on your loan. Plan 2 interest is linked to RPI (currently around 7.5%), which means balances grow significantly for graduates who are not yet earning above the threshold.

The Institute for Fiscal Studies estimates that the majority of Plan 2 borrowers will not repay in full. Typical scenarios:

Use our loan projection calculator to model your specific situation with your actual balance and income.

Should you make voluntary repayments?

This is the most misunderstood aspect of student loans. Voluntary repayments only save you money if you are on track to repay the full balance before write-off. If your loan will be written off regardless, voluntary repayments simply reduce the amount written off — money you would never have had to pay.

If the projection shows write-off: Do not make voluntary repayments. That money is better used for pension contributions (which attract tax relief), mortgage overpayments, or other savings.

If the projection shows full repayment: Voluntary repayments can reduce total interest paid. Compare the effective interest rate on your loan against the returns from alternative uses of that money.

Interest on Plan 2 loans

Plan 2 interest is RPI plus a margin of 0% to 3% based on your income. While studying, interest is RPI + 3%. After graduation, the margin reduces on a sliding scale — at the repayment threshold it is RPI + 0%, rising to RPI + 3% for incomes above £49,130.

Crucially, interest affects your balance but not your monthly repayment. Your monthly deduction is always 9% of income above the threshold, regardless of your balance or the interest rate. High interest can mean your balance grows even while you are making repayments — but this does not increase what you pay each month.

What about inflation?

Because the balance is written off in nominal terms, inflation works in your favour. A £50,000 balance written off in 30 years is worth considerably less in real terms than £50,000 today. This is another reason why voluntary repayments are often not worthwhile — you are effectively repaying a debt that is being eroded by inflation and will be cancelled regardless.

Plan 2 vs other plans

Plan 2 has a higher threshold (£27,295) than Plan 1 (£24,990) and Plan 5 (£25,000), meaning you keep more of your income before repayments begin. However, Plan 2 interest rates are typically higher than Plan 1. Plan 5 (post-August 2023) has a lower balance cap of £37,535 for tuition fees, which makes full repayment more likely for Plan 5 borrowers.

See all plan thresholds for 2026–27 →

What happens mechanically when your loan is written off?

The Student Loans Company (SLC) tracks write-off dates centrally. You do not need to apply or notify them — the balance is cancelled automatically at the end of the 30-year period. The SLC writes to you to confirm the cancellation. Any remaining direct debit or payroll deduction through PAYE stops automatically; your employer is notified through the payroll system in the same way start and stop notices are issued when you first cross the threshold.

The cancelled balance is not treated as income and generates no tax liability. There is no HMRC reporting requirement on your end. Any overpayment made in the final year before write-off is refunded by the SLC — you cannot pay more than the outstanding balance.

If you believe your write-off date is approaching, it is worth contacting the SLC to confirm the exact date on your record — particularly if you took a break from studies, deferred your start date, or changed courses.

Does a student loan affect your credit score?

No. Plan 2 student loans do not appear on your credit file with any of the UK credit reference agencies (Equifax, Experian, or TransUnion). They are not classified as consumer credit agreements under the Consumer Credit Act 1974 — they are a form of government-issued contingent liability collected through the tax system. Lenders cannot see the balance or repayment history.

However, mortgage lenders do ask about student loan repayments as part of affordability assessments. The monthly repayment deducted from your pay (9% of income above the threshold) reduces your disposable income and therefore the amount lenders are willing to offer. This is not a credit scoring effect — it is an affordability calculation based on your declared monthly obligations.

What happens to the loan if you die before write-off?

The outstanding Plan 2 balance is written off immediately on death. It does not pass to your estate, your partner, or your next of kin. The SLC requires notification of death — your executor or next of kin should contact the SLC directly, providing a death certificate. There is no debt liability for surviving family members.