UK caps student loan interest at 6% for England and Wales
Loan servicers must enforce a 6% interest ceiling on plan 2 and 3 loans from Sept
Change
The UK government capped interest on undergraduate 'plan 2' and postgraduate 'plan 3' student loans in England and Wales at 6%, effective 1 September 2026 for the 2026–27 academic year.
Why it matters
Automatic inflation-linked increases to borrower balances will be blocked for the coming academic year, removing indexation as a route for higher charges. Loan administration and accounting systems must stop applying inflation adjustments above the legal ceiling and reconcile past accruals.
Implications
- — Student Loans Company (SLC) and contracted loan servicers — must reconfigure interest-calculation systems and customer statements to enforce the 6% ceiling by 1 September 2026 — failure will produce incorrect borrower balances and invite complaints or regulatory scrutiny.
- — University student finance and advice teams and consumer debt advisers — must update repayment guidance and borrower-facing forecasts immediately — otherwise published estimates will be inaccurate when the 2026–27 repayment year begins.
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