The Government has unveiled a significant change for anyone holding a student loan, with interest rates and repayment thresholds set to alter.
The announcement follows the Department for Education’s confirmation of its annual updates to interest rates and repayment thresholds for student loans, on Monday.
The department has released its new interest rates for undergraduate and postgraduate loans; the revised repayment thresholds for Plan 1 loans; and the interest rates and deferment threshold for Mortgage Style Student Loans.
The revised interest rates are poised to impact the RPI rates for student loans – the baseline inflation measure. The government utilises the RPI figure from March each year to establish the foundation for student loan interest rates beginning in September, reports the Manchester Evening News.
According to your plan, you will incur RPI plus up to an additional 3%. In today’s update, it has been confirmed that RPI rates stand at 4.1% for anyone repaying their loan from September 1.
The repayment threshold for Plan 1 loans has likewise been modified. Last year’s rate stood at 3.2%.
Below are the complete details of how the update will impact different student loan plans:
- The applicable RPI rate is now 4.1% for the period September 1, 2026 to August 31, 2027
- The interest rate for Plan 3 is RPI + 3% (7.1%)
- The maximum interest rate applied to plan 3 loans will be capped at 6% between September 1, 2026 to August 31, 2027
- This rate is subject to any caps to reflect the Prevailing Market Rate
The Department for Education recommends that those impacted should frequently check its website, as the rates could be adjusted throughout the academic year.
