The UK government has confirmed that student loan interest rates and repayment thresholds will change from September. The Department for Education announced its yearly updates on Monday (August 10), setting the Retail Price Index (RPI) rate at 4.1% for the period starting September 1.
New interest rates for student loans
The RPI rate, which is the base inflation measure used to set student loan interest, will be 4.1% from September 1, 2026 to August 31, 2027. This is up from 3.2% last year. Depending on the loan plan, borrowers will be charged RPI plus up to an additional 3%.
The repayment threshold for Plan 1 loans will also rise to £28,005 from April 6, 2027 to April 5, 2028, up from £26,900.
Details by loan plan
For Plan 1 loans (1998-2012), the interest rate will be RPI (4.1%) or the Bank Base Rate plus 1% (currently 4.75%), whichever is lower. The maximum interest rate will be 4.1%.
For Plan 2 loans (2012-2023), interest rates will vary between RPI (4.1%) and RPI plus 3% (7.1%), but will be capped at 6%.
For Plan 5 loans (from 2023) and Plan 3 postgraduate loans, the applicable RPI rate is 4.1%. For Plan 3, the interest rate will be RPI plus 3% (7.1%), capped at 6%.
Advice for borrowers
The Department for Education advises anyone affected to regularly monitor its website, as rates may change during the academic year.
