Summary
The interest rates for Plan 2 and postgraduate student loans in England will be capped at 6% for the academic year 2026-27. This cap aims to protect graduates from increasing inflation, partly driven by the Iran war. The government has previously implemented similar caps to prevent interest rates from becoming too high.
Key Facts
- Interest rates on Plan 2 and postgraduate student loans in England will be capped at 6% in the 2026-27 academic year.
- Plan 2 loans were issued between September 2012 and July 2023 in England and continue in Wales.
- The interest rate usually depends on the retail prices index (RPI) plus up to 3%, based on earnings.
- RPI for March 2026 is not yet available; it was 3.6% in February.
- The government caps rates when inflation risks increasing significantly, having done so previously from July 2021 to February 2022 and again from September 2022 to August 2024.
- Skills Minister Baroness Jacqui Smith stated the cap aims to protect borrowers amidst global uncertainties like the Iran war.
- Student loan reform discussions continue, with criticisms about the system's fairness and repayment terms.
- There are calls for further changes, such as adjusting the repayment threshold to match income levels.
