The UK Department for Education has announced new interest rates and repayment thresholds for student loans for the 2026–27 academic year, with interest on Plan 2 and Plan 3 loans capped at 6 per cent.

The Student Loans Company (SLC) announced the new rates on Monday, confirming that they will apply from September 1, 2026, to August 31, 2027.

The applicable Retail Price Index (RPI) rate for the period is 4.1 per cent.

For Plan 1 undergraduate loans, borrowers will be charged either the RPI rate of 4.1 per cent or the Bank of England base rate plus one percentage point, currently 4.75 per cent, whichever is lower.

The maximum interest rate for Plan 1 loans during the period will therefore be 4.1 per cent.

The repayment threshold for Plan 1 loans will also increase to £28,005 from April 6, 2027, to April 5, 2028.

For Plan 2 undergraduate loans, the interest rate will normally range from 4.1 per cent to 7.1 per cent, depending on the borrower’s circumstances. However, the maximum rate will be capped at 6 per cent throughout the 2026–27 academic year.

The same 6 per cent cap will apply to Plan 3 postgraduate loans, which would otherwise attract an interest rate of RPI plus 3 per cent, or 7.1 per cent.

Borrowers under Plan 5 undergraduate loans will pay an interest rate of 4.1 per cent, equivalent to the applicable RPI rate.

The new rates will also affect borrowers with Mortgage Style Loans, whose interest rate will be set at 4.1 per cent for the period.

The deferment threshold for Mortgage Style Loans will be £44,311 from September 1, 2026, to August 31, 2027.

The Student Loans Company advised borrowers to continue checking its official information channels during the academic year, noting that interest rates could change during the period.