"The government is capping the interest rate on plan 2 loans at 6% from 1 September, for the 2026-27 academic year. This new cap will also apply to postgraduate plan 3 loans, protecting students from inflation pressures."
"Many graduates are handing over money from their pay packet every month to repay their loan, but everything that is taken is dwarfed by the interest that is being added to their debt."
"Each year, the government revises interest rates on student debt based on the current pace of inflation, using RPI, which is consistently the highest of the three official indices."
The government is implementing a 6% cap on interest rates for plan 2 and plan 3 student loans starting September 1, 2026. This measure aims to protect students and graduates in England and Wales from inflation pressures linked to the Middle East situation. Currently, many graduates are frustrated as their repayments are overshadowed by accruing interest. The cap will slightly reduce the interest added to loans, allowing debt to grow more slowly. Interest rates are revised annually based on RPI, which is currently at 3.2%, with an additional fixed charge for some borrowers.
Read at www.theguardian.com
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