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UK government caps student loan interest rates at 6%
The cap overrides an inflation-linked formula and covers 5.8 million borrowers, according to government estimates.
- On Tuesday, the government announced interest on Plan 2 and Plan 3 student loans will be capped at 6% from September 2026, aiming to shield graduates from escalating repayment costs.
- Skills Minister Baroness Jacqui Smith linked the intervention to global shocks, stating the government aims to 'defend against the consequences of far-away conflicts in an uncertain world,' citing inflation risks tied to the Iran war.
- The new 6% cap replaces the Retail Price Index plus 3% formula, which currently stands at 6.2%. It applies to Plan 2 loans issued in England between September 2012 and July 2023.
- National Union of Students president Amira Campbell called the cap a 'huge win,' stating the government is 'taking action to prevent our debts from spiralling,' though she urged further reforms to repayment thresholds.
- While officials continue to describe the existing finance structure as 'broken,' Prime Minister Keir Starmer has vowed to address widespread dissatisfaction by exploring broader reforms to make the system fairer.
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33 Articles
Birmingham MailReposted by 
One News Page
One News PageInterest rates on Plan 2 student loans to be capped at 6%
Interest on Plan 2 and 3 student loans will be capped at 6% instead of RPI plus 3% to protect borrowers
·Birmingham, United Kingdom
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Total News Sources33
Leaning Left5Leaning Right4Center11Last UpdatedBias Distribution55% Center
Bias Distribution
- 55% of the sources are Center
55% Center
L 25%
C 55%
R 20%
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