UK government caps student loan interest rates at 6% | Student finance
The Ministry of Education has announced that the interest rate on plan 2 and plan 3 student loans will be capped at 6%.
Graduates with Plan 2 loans currently pay interest rates of up to 3% on their earnings plus the retail price index (RPI) measure of inflation. Current students on plan 2 and plan 3 loans receive a +3% RPI interest rate during their studies.
Schedule 2 student loans cover those taken out for undergraduate courses and Postgraduate Certificates of Education (PGCE) since 1 September 2012 in Wales and between 1 September 2012 and 31 July 2023 in England.
Scheme 3 student loans cover postgraduate masters or PhD courses for borrowers in England and Wales.
On the prospect of an Iran war fueling inflation, Skills Secretary Jacqui Smith said: “We know the conflict in the Middle East is causing concern at home, and while the risk of global shock is out of our control, protecting people here is not.
“Capping the maximum interest rate on Plan 2 and Plan 3 student loans will provide immediate protection for borrowers and support those most affected by this already unfair system.
“We are now taking action to defend against the consequences of distant conflicts in an uncertain world.”
