15 May 2023

The Department for Education (DfE) has confirmed that the maximum plan 2 and the postgraduate loan interest rate, will be 7.1% between 1 June 2023 and 31 August 2023.

Since September 2022, the maximum plan 2 and the postgraduate loan (PGL) interest rate has been capped in line with the latest prevailing market rate available at the time.

The maximum interest rates for all plan 2 (undergraduate) and plan 3 (postgraduate) loans have been:

  • 6.3% between 1 September 2022 to 30 November 2022
  • 6.5% between 1 December 2022 to 28 February 2023
  • 6.9% between 1 March 2023 and 31 May 2023.

However, from 1 August 2023 the cap will also apply to plan 5 (undergraduate) loans, which are being introduced for the academic year 2023/24. Plan 5 loan borrowers are not due to come into repayment until April 2026.

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.

The parliamentary under secretary of state for the school system and student finance, Baroness Barran said:

‘‘I am now announcing a further cap: from 1 June 2023 to 31 August 2023 the maximum interest rate will be 7.1% for all plan 2 and plan 3 loans, reflecting the most recent prevailing market rate. For the first time, this cap will also apply to plan 5 (undergraduate) loans, which become available from 1 August. The temporary cap is a reduction compared to the 7.3% maximum rate announced in June.

We will confirm student loan interest rates to apply from 1 September 2023 closer to the time.’’

Read the full news story here and current student and postgraduate loan thresholds here.

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