{"id":44038,"date":"2026-04-07T18:19:08","date_gmt":"2026-04-07T18:19:08","guid":{"rendered":"https:\/\/foreignnewstoday.com\/?p=44038"},"modified":"2026-04-07T18:19:08","modified_gmt":"2026-04-07T18:19:08","slug":"interest-rate-to-be-capped-on-some-student-loans-uk-news","status":"publish","type":"post","link":"https:\/\/foreignnewstoday.com\/?p=44038","title":{"rendered":"Interest rate to be capped on some student loans | UK News"},"content":{"rendered":"


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Interest rates on plan 2 and 3 student loans will be capped at 6% for one year from September, the government has announced.\u00a0<\/p>\n

The measure will protect students and graduates in England and Wales from the potential of inflation pressures due to the war in the Middle East.<\/p>\n

The decision comes after mounting criticism of the student loan system, with many graduates seeing their debts grow to more than they ever borrowed due to high interest rates.<\/p>\n

Interest on plan 2 loans is currently paid at a rate of between RPI and RPI plus 3%, depending on earnings. At the moment, this means the rate varies between 3.2% and 6.2%. Students on plan 3 loans also face an interest rate of RPI +3%, and this applies while they are studying and after they graduate.<\/p>\n

From 1 September, interest on both plans will be capped at 6%.<\/p>\n

With the prospect of the Iran war pushing up inflation, skills minister Jacqui Smith said: “We know that the conflict in the Middle East is causing anxiety at home, and while the risk of global shocks is beyond our control, protecting people here is not.<\/p>\n

“Capping the maximum interest rate on plan 2 and plan 3 student loans will provide immediate protection for borrowers, supporting those who are most exposed within this already unfair system.”<\/p>\n

What’s the difference between the loans? <\/strong><\/p>\n

Plan 2 student loans are those taken out for undergraduate courses and Postgraduate Certificates of Education since September 2012 in Wales and between September 2012 and July 2023 in England.<\/p>\n

Plan 3 student loans cover postgraduate master’s or doctoral courses for borrowers in England and Wales.<\/p>\n

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\n The announcement comes amid fears that the conflict could push up inflation. Pic: PA
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Responding, Tom Allingham, student loans expert at Save the Student, said: “We’re pleased to see the government get ahead of a likely spike in RPI by capping the interest applied to Student Loans, giving students and graduates some clarity in these uncertain times.<\/p>\n

“It’s also notable that, as things stand, the other two student loan plans operating in England (1 and 5) will continue to charge a much lower rate of interest.<\/p>\n

“That a cap can be introduced, and plan 2 and 3 graduates will still be charged significantly more interest than those of different generations, surely highlights the system’s deeply embedded inequalities.<\/p>\n

“Amid the ongoing student loan inquiry and growing cries from students and graduates for reform, we’re calling on the government to announce far more substantial changes that create a truly fair system.”<\/p>\n

Read more from Sky News:
‘Unusually warm’ temperatures are on the way<\/a>
E-bike and e-scooter fires have hit a record high<\/a><\/strong><\/p>\n

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