Overview
- Millions of borrowers in England and Wales will see interest on Plan 2 and Plan 3 loans capped at 6%, with the Department for Education, which confirmed the change Tuesday, applying it from 1 September 2026 for the 2026/27 academic year.
- The cap replaces the RPI plus up to 3% ceiling used in recent years, and it does not change monthly repayments, which are set by income rather than balance size.
- Officials say the one-year limit is a safeguard against a jump in RPI that could follow higher oil prices and other shocks from the war in the Middle East.
- The Institute for Fiscal Studies says the cap mostly helps higher earners, while lower earners continue to accrue interest at RPI, and Save the Student says the government still needs to clarify whether 6% will operate strictly as a ceiling.
- The announcement is paired with plans to reintroduce means-tested maintenance grants from 2028/29 and comes as Wales signals support in principle pending a post-election decision, after prior pressure over the freeze of the Plan 2 repayment threshold.