Student loan interest rate up to 7.3%
Student loan repayment interest will revert to an RPI plus 3% increase from December and the rate will rise to 7.3% next month
The government removed the RPI factor in June reducing student loan rates to 7.1% from the previous 9%, which was well above the current base rate.
The maximum Plan 2, Plan 5 and postgraduate loan interest rate will be 7.3% between 1 September 2023 and 30 November 2023.
Since September 2022 maximum student loan interest rates have been capped in line with the latest prevailing market rate available at the time of setting the cap.
From 1 December 2023 the maximum Plan 2 and the PGL interest rate is scheduled to revert to RPI+3%, and the Plan 5 interest rate linked to RPI.
Further caps will be implemented, if required, the government said, to reduce student loan interest rates, and will be confirmed closer to the time.
Where the Government considers that the student loan interest rate is too high in comparison to the prevailing market rate, it will reduce the maximum Plan 2, Plan 5 and postgraduate loan interest rate by applying a cap for a set period of three months (or longer, if the prevailing market rate remains below the student loan rate at the next monitoring point).
Plan 2 borrowers will continue to repay 9% of their earnings over the repayment threshold. The repayment threshold for Plan 2 ICR loans is £27,295 for 2023-24.
Plan 2 ICR loans are those loans taken out for a course starting between 1 September 2012 and 31 July 2023 (England), or after 1 September 2012 (Wales).
Postgraduate loan borrowers will continue to repay 6% of their earnings over the repayment threshold. The repayment threshold for postgraduate loans is £21,000 for FY 2023-24.
Plan 5 loans were introduced for academic year 2023/24, available for undergraduate courses starting after 1 August 2023 (England only).
Plan 5 loan borrowers are not due to come into repayment until April 2026.
Plan 1 ICR loans, ie, loans taken out for a course starting before 1 September 2012, are not affected.
DfE guidance, Repaying your Student Loan