Student Loan Interest Rate History
Current and historical UK student loan interest rates for Plan 1, 2, 4, 5, and Postgraduate loans, showing how rates changed and what determines the next update.
Last updated: 10 May 2026
What are the current student loan interest rates?
On this page's current guide snapshot, Plan 1, Plan 4, and Plan 5 are about 3.2%, while Plan 2 and Postgraduate loans can reach about 6.2%. The exact rate depends on your plan, your income in some cases, and the annual RPI-based update that usually takes effect each April.
Plan 1, 4 & 5
3.2%
2024/25 rate
Plan 2
6.2%
RPI + 3%
September RPI
3.2%
Sets next year's rates
How Interest Rates Are Set
Plan 1 & Plan 4
Interest rate is the lower of:
- RPI (Retail Price Index)
- Bank of England base rate + 1%
Plan 2 (Standard)
Interest rate varies by income:
- Below £28,470: RPI only
- £28,471 - £51,245: RPI + 0-3% sliding
- Above £51,245: RPI + 3%
Plan 5 (New)
Simpler rate: RPI only, regardless of income. No additional margin for high earners.
Postgraduate Loans
Standard rate is RPI + 3%, though currently capped at the same level as other loans.
Historical Interest Rates by Tax Year
| Year | RPI | Plan 1 | Plan 2 (Low) | Plan 2 (High) | Plan 4 | Notes |
|---|---|---|---|---|---|---|
| 2024/25 | 7.3% | 7.3% | 7.3% | 7.3% | 7.3% | All plans capped at RPI |
| 2023/24 | 7.1% | 7.1% | 7.1% | 7.1% | 7.1% | Plan 5 introduced |
| 2022/23 | 12.3% | 6.5% | 6.5% | 6.5% | 6.5% | Rates capped below RPI |
| 2021/22 (Mar) | 1.5% | 1.5% | 1.5% | 4.5% | 1.5% | |
| 2020/21 | 2.4% | 1.1% | 2.4% | 5.4% | 1.1% | |
| 2019/20 | 2.4% | 1.75% | 2.4% | 5.4% | 1.75% | |
| 2018/19 | 3.3% | 1.75% | 3.3% | 6.3% | 1.75% | |
| 2017/18 | 1.6% | 1.25% | 1.6% | 4.6% | — | |
| 2016/17 | 0.9% | 1.25% | 0.9% | 3.9% | — | Postgrad loans started |
| 2015/16 | 0.9% | 0.9% | 0.9% | 3.9% | — | |
| 2014/15 | 2.5% | 1.5% | 2.5% | 5.5% | — | |
| 2013/14 | 3.3% | 1.5% | 3.3% | 6.3% | — | |
| 2012/13 | 3.6% | 1.5% | 3.6% | 6.6% | — | Plan 2 started |
Plan 2 (Low) = rate for borrowers earning at/below threshold. Plan 2 (High) = rate for high earners (RPI + 3%). Rates shown are from September each year (when new rates apply).
Key Trends & Events
Inflation Spike
RPI hit 12.3% in September 2022, which would have set rates at 12.3-15.3% for Plan 2. The government introduced a cap to protect borrowers, limiting rates to 6.5%.
COVID era lows
Low inflation during COVID meant Plan 1 rates dropped to just 1.1%, the lowest in years. This was a rare period when student loan interest was genuinely favourable compared to commercial rates.
High Real Rates
Plan 2 high earners faced rates of 5-6.6% during periods of low general inflation. Combined with the threshold freeze in later years, this significantly increased real loan costs for graduates.
Why Interest Rates Matter (And When They Don't)
✓ When Interest Matters
- • You'll repay your loan in full
- • You're considering overpayment
- • You're a high earner (>£50k starting)
- • You have a small loan balance
✗ When It Doesn't
- • You won't repay before write off
- • Your loan will be written off anyway
- • Interest just adds to what's cancelled
- • Most Plan 2 borrowers fit this category
ℹ️The Key Insight
For most borrowers, the interest rate makes little practical difference, you're paying a fixed percentage of income above threshold until write off, regardless of the balance. Interest rates only matter if you'll clear the loan in full.
When Are Rates Set?
Annual Rate Setting Timeline
Rates are typically announced in November/December for the following April. The September RPI figure is the key determinant.
Related Resources
Student Loan Interest Rate FAQ
- What are the current student loan interest rates?
- On this page's current guide snapshot, Plan 1, Plan 4, and Plan 5 are about 3.2%, while Plan 2 and Postgraduate loans can reach about 6.2%. The exact rate depends on your plan and the annual RPI-based update.
- When are student loan interest rates updated?
- Student loan interest rates are usually updated once a year. The government uses the September RPI figure, confirms the rates later in the year, and the new rates normally take effect the following April.
- Is Plan 2 interest higher than Plan 5?
- Yes. Plan 2 can charge up to RPI plus 3%, while Plan 5 uses RPI only. That makes Plan 2 the more expensive plan on interest for higher earners.
- Does student loan interest matter if I will not repay in full?
- Usually not much. If your balance will be written off before you clear it, a higher interest rate often only increases the amount that is later cancelled rather than the amount you actually repay.