Student loan interest rates capped at 6% for Plan 2 and postgraduate loans – here's what you need to know

Government: 'Cap to protect against global shocks'

Plan 2 student loans apply to English students who started uni between 2012 and 2022 AND Welsh students who've started uni since 2012. Postgraduate, or Plan 3 loans, are for postgraduate students in England and Wales. Currently:

• Plan 2 loan interest is set at RPI (Retail Prices Index) inflation + 3% while studying. Afterwards it moves to tiered rates starting at RPI, rising up to RPI + 3% depending on what you earn. The rate used is usually the prior March's RPI before the September academic year. The rate of inflation in March 2025 was 3.2%, so the current interest rate is up to 6.2%.

• Plan 3 (postgraduate) interest is set at the same RPI measure + 3%, both while studying and afterwards. The current interest rate for postgraduate loans is therefore 6.2%.

The rate of inflation is the change in prices for goods and services over time. March's RPI is due to be published by the Office for National Statistics (ONS) on Wednesday 22 April. RPI currently stands at 3.6% for the 12 months up to February 2026.

However, with the potential for the conflict in the Middle East to push up inflation, the Government says it is stepping in now to protect students and graduates from "any short-term increase in RPI due to global shocks".

This means anyone with a Plan 2 and 3 loan (including graduates and current students) will see the interest on their loans capped at a maximum of 6% for the 2026 to 2027 academic year starting on 1 September 2026. Any future changes remain "under review".

What's going on with Plan 2 loans?

MoneySavingExpert.com founder Martin Lewis has previously spoken out on the topic of interest and student loans and why, sometimes, interest added isn't the same as interest paid. This is because the real impact of the amount you borrow, and the interest charged, isn't on your annual repayments – it's on whether you'll clear the loan or not within 30 years. To understand this further, see Martin's full Plan 2: Should you overpay now? blog.

Earlier this year, Martin also called out an upcoming Plan 2 student loan repayment freeze on BBC Newsnight, and things have escalated since. You can hear that full interview and, most importantly, Martin's explanation of what it means in practice in Martin's Plan 2 loans special podcast (available on BBC, Apple, Spotify etc) – and then get step-by-step help and an AI tool in his Plan 2 loans detailed help blog.