Full Breakdown
UK Student Loan Interest Rates and Repayment Thresholds for 2026-2027
8/11/2026, 3:50:35 AM
New Interest Rates Effective 1 September 2026
The Department for Education announced that the Retail Price Index (RPI) used as the baseline for student-loan interest will be 4.1 % for the period 1 September 2026 – 31 August 2027. All plans that reference RPI will apply this rate unless a lower figure is triggered by a fall in the Bank of England base rate after 1 September.
Plan-Specific Rates and Caps
- Plan 1 (1998-2012 undergraduate loans) – Interest is the lower of RPI 4.1 % or the Bank Base Rate + 1 % (currently 4.75 %). The maximum rate for the period is capped at 4.1 %.
- Plan 2 (2012-2023 undergraduate loans) – Variable rates range from RPI 4.1 % up to RPI + 3 % (7.1 %). A ceiling of 6 % applies from 1 September 2026 to 31 August 2027, as announced on 7 April 2026.
- Plan 3 (postgraduate loans) – Charged at RPI + 3 % (7.1 %) but also capped at 6 % for the same period.
- Plan 5 (from the 2023 academic year) – Fixed at RPI 4.1 % with no additional cap.
- Mortgage-style loans – Interest set at RPI 4.1 %; the deferment threshold is £44,311 for the same timeframe.
Repayment Threshold Adjustment for Plan 1
The repayment threshold for Plan 1 borrowers will increase to £28,005 beginning 6 April 2027 and remain in force until 5 April 2028.
Impact on Borrowers
These changes mean that borrowers across all plans will see interest rates anchored to a lower inflation measure than in previous years, while caps on higher-rate plans limit potential increases. The higher repayment threshold for Plan 1 reduces the income level at which repayments commence, offering modest relief to lower-earning graduates. Mortgage-style loan holders face a higher deferment threshold, potentially delaying repayment for higher-earning borrowers.
The Department for Education emphasized that the rates may be revised during the academic year if the Bank Base Rate falls, urging borrowers to monitor the official website for updates.
