The United Kingdom has announced a cap on student loan interest rates at six per cent for the 2026/2027 academic year as part of new repayment measures aimed at reducing borrowing costs for students and graduates.
The UK Department for Education, through the Student Loans Company, said the new rates will take effect from September 1, 2026, to August 31, 2027. The applicable Retail Price Index (RPI) for the period has been set at 4.1 per cent.
Under the revised framework, Plan 2 undergraduate loans and Plan 3 postgraduate loans, which would ordinarily attract interest rates of up to 7.1 per cent, will have their maximum interest capped at six per cent.
Plan 1 undergraduate loans will attract an interest rate of 4.1 per cent, while the repayment threshold will increase to £28,005 from April 6, 2027. Plan 5 undergraduate loans will also carry an interest rate of 4.1 per cent.
The Student Loans Company further announced that Mortgage Style Loans will attract a 4.1 per cent interest rate, with the deferment threshold increasing to £44,311 for the same period.
The agency advised borrowers to monitor its official platforms, noting that interest rates may be adjusted during the academic year in line with economic conditions.
The changes are expected to provide financial relief to thousands of students and graduates by limiting the growth of education loan repayments amid rising living costs.
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