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UK Caps Student Loan Interest at 6% to Protect Borrowers

4/7/2026

39 7 Full Breakdown

Summary

Story summary

The UK government will cap interest on Plan 2 and Plan 3 loans at 6% from September 1, 2026.
Skills Minister Jacqui Smith says the cap protects borrowers from rising inflation.
Graduates face a frozen repayment threshold of £29,385 until 2030, while Prime Minister Keir Starmer has indicated willingness to explore changes.
Amira Campbell of the National Union of Students calls the cap a significant win and urges reforms.

History

Historical Context

The Student Loans Act of 1990 established the framework for student loans in the UK, initially offering 0% interest for the first year to over 100,000 borrowers. Recent changes, including a cap on interest for Plan 2 and Plan 3 loans at 6%, reflect ongoing inflation concerns and advocate for further reforms to support graduates facing financial challenges.

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Story summary

The UK government will cap interest on Plan 2 and Plan 3 loans at 6% from September 1, 2026.
Skills Minister Jacqui Smith says the cap protects borrowers from rising inflation.
Graduates face a frozen repayment threshold of £29,385 until 2030, while Prime Minister Keir Starmer has indicated willingness to explore changes.
Amira Campbell of the National Union of Students calls the cap a significant win and urges reforms.

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