Students: Loans
The question
To ask the Secretary of State for Education, with reference to her Department's press release entitled Interest rate cap introduced to protect Plan 2 borrowers, published on 7 April 2026, what estimate her Department has made of the cost to the public purse of capping interest on Plan 2 and 3 student loans at 6%.
Answered by Josh MacAlister
The government is capping maximum interest rates on Plan 2 and Plan 3 (postgraduate) student loans at 6%, instead of the Retail Prices Index (RPI) plus 3%, for the 2026/27 academic year.
This short-term protective measure will apply from the 1 September 2026 to the 31 August 2027 and removes the risk of a temporary increase in inflation causing loan balances to compound at an unsustainable rate.
Student loan interest rates are ordinarily set for each academic year by reference to the RPI value for the year to the preceding March. On that basis, interest rates for the 2026/27 academic year would normally be determined using the RPI figure for March 2026, due to be published on 22 April 2026.
The impact of the interest rate cap on the public purse will depend on the March RPI value.
Verbatim has judged this answer against the question that was actually asked — answered, partly answered, or evaded. Sign in to see the verdict →