The UK Government has confirmed changes to student loan interest rates and repayment thresholds, with the Retail Prices Index (RPI) set at 4.1% for the period starting September 1, 2026. The Department for Education released its annual update on Tuesday, August 11.
What has changed
The update covers new interest rates for undergraduate and postgraduate loans, updated repayment thresholds for Plan 1 loans, and interest rates and deferment threshold for Mortgage Style Student Loans. The RPI figure from March is used as the baseline for student loan interest rates beginning in September.
Depending on the loan plan, borrowers will be charged RPI plus up to an additional 3%. The repayment threshold for Plan 1 loans will rise to £28,005 from April 6, 2027, up from £26,900.
Breakdown by plan
Plan 1: The applicable RPI rate is 4.1% for September 1, 2026 to August 31, 2027. The interest rate is RPI (4.1%) or Bank Base Rate + 1% (currently 4.75%), whichever is lower. The maximum interest rate will be 4.1%.
Plan 2: Interest rates vary between RPI (4.1%) and RPI + 3% (7.1%), capped at 6% for the period.
Plan 3: The interest rate is RPI + 3% (7.1%), capped at 6%.
Plan 5: The applicable RPI rate is 4.1%, subject to any caps.
The Department for Education advises borrowers to check its website regularly, as rates may vary throughout the academic year.
