UK Announces New Student Loan Interest Rates, Repayment Thresholds For 2026-27

The UK Department for Education has announced new interest rates and repayment thresholds for student loans for the 2026-27 academic year, including a six per cent cap on interest rates for Plan 2 and Plan 3 loans.

The Student Loans Company announced the new rates on Monday, August 10, 2026, stating that they will apply from September 1, 2026, to August 31, 2027.

According to the agency, the applicable Retail Price Index rate for the period is 4.1 per cent.

For Plan 1 undergraduate loans, the interest rate will be either the RPI rate of 4.1 per cent or the Bank of England Base Rate plus one per cent, currently 4.75 per cent, whichever is lower.

The maximum interest rate for Plan 1 income-contingent repayment 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, and will remain at this level until April 5, 2028.

For Plan 2 undergraduate loans, the Student Loans Company said interest rates would normally range from RPI at 4.1 per cent to RPI plus three per cent, or 7.1 per cent, depending on individual circumstances.

However, the maximum interest rate on Plan 2 loans will be capped at six per cent between September 1, 2026, and August 31, 2027.

The six per cent cap will also apply to Plan 3 postgraduate loans.

The Student Loans Company said the standard interest rate for Plan 3 loans would be RPI plus three per cent, or 7.1 per cent, but confirmed that the rate would be capped at six per cent during the 2026-27 academic year.

Meanwhile, borrowers under Plan 5 undergraduate loans will pay an interest rate of 4.1 per cent, in line with the applicable RPI rate.

The new rates will also apply to Mortgage Style Loans, with the interest rate set at 4.1 per cent for the same period.

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

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

The new rates and thresholds will affect millions of student loan borrowers across the United Kingdom as the 2026-27 academic year begins.