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KS5 · Year 12 / Year 13 · Lesson plan

Plan 5 student loans — how they actually work

A classroom-ready 50-minute KS5 lesson on the UK Plan 5 student loan system: who is on Plan 5, the £25,000 threshold and 9% rate, the 40-year write-off, and the overpayment-decision debate. Free to use.

Key Stage
KS5
Year group
Year 12 / Year 13
Age range
16–18
Duration
50 minutes
Subject
PSHE / Economics / Citizenship
Cost
Free

Learning aim

Students can explain how Plan 5 student loans work, calculate annual repayment for a given salary, and articulate why most Plan 5 borrowers will not benefit from voluntary overpayment.

CURRICULUM National Curriculum links

RESOURCES What you'll need

LESSON Lesson structure (50 minutes)

Opening
HOOK
Project this real claim: "I'm on Plan 5 and I'm going to overpay aggressively to clear it as fast as possible." Ask students: who agrees? Take 3-4 quick opinions. We'll come back to this in the plenary.
Direct teach
TEACH
Define Plan 5: applies to undergraduates in England starting from August 2023. Key parameters for 2026/27: threshold £25,000/year, repayment rate 9% above threshold, write-off at 40 years from first April liable. Interest at RPI only. So below threshold = pay nothing. Above threshold = repay 9% of every pound earned above £25,000.
Pupils apply
GUIDED
Class calculates annual repayments for three scenarios. (a) £28,000 salary: (28,000 − 25,000) × 9% = £270/year. (b) £45,000 salary: (45,000 − 25,000) × 9% = £1,800/year. (c) £70,000 salary: (70,000 − 25,000) × 9% = £4,050/year. Pupils show working on mini-whiteboards.
Stretch / depth
CHALLENGE
Project this scenario: graduate takes a £60,000 loan at uni. Stays at the £45,000 salary average above. Over 40 years they repay £1,800 × 40 = £72,000 in nominal terms. Write-off happens at year 40. Do they "save" by overpaying? Answer: NO. Because the loan writes off at year 40 anyway, overpayment is paying voluntary tax. The "I want it gone faster" instinct is psychologically real but financially wrong for most Plan 5 borrowers.
Close
PLENARY
Return to the opening claim. Take a class vote: should our hypothetical Plan 5 borrower overpay? Discuss. Land on: only the small minority of high-earning, full-career borrowers who would clear the loan in <40 years anyway should consider it. For most: treat it like a graduate tax.

DIFFERENTIATION Adapting for all learners

Support (working below ARE)

Pre-fill the calculation template — pupils only complete the final multiplication step. Allow calculator. Focus on understanding the threshold concept rather than fast arithmetic.

Stretch (working above ARE)

Pupils compute interest accrued vs repayments made over the first 5 years at £30k salary, demonstrating that the balance can GROW despite paying. Then discuss what this means for the "graduate tax" mental model.

SEND SEND adaptations

For pupils with dyscalculia: provide a step-by-step decision flowchart — "Earnings < £25,000? → pay £0. Earnings ≥ £25,000? → repayment = (earnings − £25,000) × 9%." For pupils with autism: provide a visual timeline showing the 40-year horizon and key milestones.

EAL EAL support

Vocabulary: "threshold", "marginal rate", "income-contingent", "write-off horizon", "graduate tax". Sentence frames: "If I earn £___, my annual loan repayment is £___." "Plan 5 writes off after ___ years."

ASSESSMENT Assessment criteria

Pupils can: (1) state the Plan 5 threshold and rate; (2) calculate Plan 5 repayment for any salary; (3) explain the 40-year write-off mechanism; (4) articulate why most Plan 5 borrowers should not voluntarily overpay.

HOME Homework pack

Three activities consolidating Plan 5 mechanics. ~30 minutes.

Calculation set

What pupils do: Calculate Plan 5 annual repayment for these salaries: (a) £24,000, (b) £30,000, (c) £42,000, (d) £58,000.

Expected output: 4 calculations with working.

Marking guidance: 2 marks per accurate answer. 8 marks total.

Comparison essay

What pupils do: In 200 words, compare Plan 5 (40-year write-off) with Plan 2 (30-year write-off). Which is "better" for graduates? Justify with reference to typical career-earnings paths.

Expected output: 200-word structured response.

Marking guidance: 6 marks — 2 for accurate mechanics, 2 for analysis, 2 for justified conclusion.

Real-world decision

What pupils do: A 24-year-old graduate has a £45,000 Plan 5 balance. They've been left £30,000 in a will. Should they pay off the student loan, put it in a stocks-and-shares ISA, or save for a house deposit? Justify your recommendation.

Expected output: 300-word recommendation with reasoning.

Marking guidance: 8 marks — 3 for accurate Plan 5 understanding, 3 for considered analysis of alternatives, 2 for clear recommendation.

HOME Homework pack

Four activities to consolidate UK income tax mechanics. ~30 minutes.

Band calculation

What pupils do: For each gross salary, calculate the UK income tax (England/Wales/NI 2026/27 rates): (a) £15,000, (b) £30,000, (c) £55,000, (d) £85,000. Show the band split for each.

Expected output: 4 calculations with band-by-band working.

Marking guidance: 2 marks per accurate total (8 marks). Bonus 4 marks for correct band splits.

Personal Allowance research

What pupils do: What is the Personal Allowance? Why does it exist? Who loses it (the taper rule)?

Expected output: A 3-question short-answer response.

Marking guidance: 2 marks per accurate answer. 6 marks total.

Public spending

What pupils do: Find 5 different things UK income tax pays for. Order them by approximate share of government spending (biggest first).

Expected output: A ranked list of 5 spending categories.

Marking guidance: 1 mark per category, 1 mark per correct relative ranking. 8 marks total (e.g. NHS, pensions, education, defence, welfare).

Extension (optional)

What pupils do: Compare England, Scotland, and Wales income tax for someone earning £50,000. Which nation pays the most? Why?

Expected output: A 3-nation comparison table plus 2-sentence explanation.

Marking guidance: Up to 6 marks for accurate research and conclusion (Scotland pays more above ~£28k).

Family discussion prompt (safeguarding-aware)

Ask a working adult: "Name three things you think our tax money pays for." Compare their answers to what you learned in class.

SAFEGUARDING Classroom safeguarding

Note for teachers: Do not ask pupils about their own family's tax band, salary, or income. Frame all examples through fictional salaries. Be aware some pupils may be unsure of family financial circumstances — focus on the public-spending side of the lesson, not personal income.

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