Analysis · IFS | Institute for Fiscal Studies · 27 February 2026
Options for changing Plan 2 student loans: costs, benefits, and distributional effects: What It Means for Your Student Loan
Written by Zubair Arshed FIA, Chartered Actuary
Fellow of the Institute and Faculty of Actuaries
Actuarial Post Life and Health Actuary of the Year 2024
The Institute for Fiscal Studies has published an analysis of the options for reforming Plan 2 student loans, weighing up the costs, benefits and who wins or loses. If you borrowed for an undergraduate degree in England between 2012 and 2023, these are the levers that could reshape what you actually repay, so it pays to understand how each one works.
This analysis responds to reporting by IFS | Institute for Fiscal Studies. We recommend reading the original alongside it: Options for changing Plan 2 student loans: costs, benefits, and distributional effects ↗
What has the IFS actually reported?
The IFS has produced a study setting out a menu of options for changing Plan 2 loans, the system that covers most English undergraduates who started between autumn 2012 and summer 2023. The piece looks at costs to government, benefits to borrowers, and the distributional effects, meaning who gains and who loses across the earnings spectrum. This is research and policy analysis, not a government announcement, so nothing here is confirmed as coming into force.
Plan 2 is a natural target for this kind of work because it sits awkwardly. It carries the highest interest rates of any current plan, RPI plus a sliding scale of up to three percentage points depending on income, and its repayment threshold of £29,385 is frozen until at least April 2030. That freeze quietly drags more of your salary into the 9 percent repayment zone every year as wages rise with inflation.