![]() ![]() Will this change in RPI make paying off my student loan unaffordable? The rate will be 7.3% from 1 December 2022 unless PMR remains below this level. ![]() The Government has announced that – from September 2022 to end November 2022 the maximum Plan 2 and Plan 3 interest rates will be 6.3%. The new interest rate is applied from September and to protect borrowers the Government, by law, must cap maximum student loan rates to ensure the interest rate charged on the loan is in line with market rates for personal loans. Repayments are linked to income, not interest rates. The interest rate on student loans has no impact on monthly repayments. March’s RPI figure is used to set the interest rate for Plan 2 loan repayments from September 2022 onwards. The RPI is the measure of inflation that is used for calculating interest on student loans. How will the RPI announcement affect student loan interest rates? The RPI has always been used for calculating interest on student loans. The RPI is a measure of inflation produced by the UK's Office for National Statistics. More details of the student loan plans can be found here: Repaying your student loan: Which repayment plan you're on - GOV.UK (Plan 3 loans are postgraduate loans. Plan 2 student loans includes anyone who took out a student loan for an undergraduate, Level 4/5, and/or PGCE course beginning on or after 1 September 2012, as well as Advanced Learner Loan borrowers. So what is a Plan 2 and Plan 3 student loan? This further cut will provide reassurance for student loan borrowers on Plan 2 (undergraduate) and Plan 3 (Postgraduate) loans. The rate will be capped at 7.3% from 1 December 2022 unless the Prevailing Market Rate (PMR) remains below this level. We intervened in June to protect borrowers in response to the rise in the rate of RPI due to global economic pressures which meant student loan borrowers would have faced a 12% interest rate in September. Student loan interest rates will now be capped at 6.3%, rather than 7.3%, from 1 September 2022 to 30 November 2022 – this will protect student loan borrowers from rising inflation rates. Here's what you need to know about student loan interest rates. *This post was updated on 10 August 2022 to reflect the announcement that student loan interest rates for current borrowers will be capped to protect them from a rise in inflation. ![]()
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