UK Caps Student Loan Interest Rates at 6% for 2026-27

The UK Department for Education has set a cap on student loan interest rates at 6% for Plan 2 and Plan 3 loans for the 2026-27 academic year. This announcement was made by the Student Loans Company on Monday, August 10, 2026.

The new interest rates will be applicable from September 1, 2026, to August 31, 2027. The Retail Price Index (RPI) for this period is confirmed at 4.1%.

For Plan 1 undergraduate loans, the interest rate will be either RPI (4.1%) or the Bank Base Rate + 1% (currently 4.75%), with a maximum rate of 4.1%. The repayment threshold for Plan 1 loans will increase to £28,005 from April 6, 2027, to April 5, 2028.

For Plan 2 loans, interest rates will vary between RPI (4.1%) and RPI + 3% (7.1%), but will be capped at 6%. The same cap applies to Plan 3 postgraduate loans.

The interest rate for Plan 5 undergraduate loans will be 4.1%. The Student Loans Company advised borrowers to monitor its website for potential changes during the academic year.