The Department for Education today 10 August 2026 confirmed annual updates to interest rates for undergraduate and postgraduate Income Contingent Student Loans, repayment thresholds for Plan 1 Income Contingent Student Loans, and the interest rates and deferment threshold for Mortgage Style Student Loans.
Income Contingent Repayment Student Loans
Undergraduate loans
Income Contingent Student Loans for Plan 1 (1998-2012) undergraduate loans
The applicable Retail Price Index (RPI rate) is 4.1% for the period 1 September 2026 to 31 August 2027. The interest rate for Plan 1 income-contingent repayment student loans is RPI (4.1%) or the Bank Base Rate + 1% (currently 4.75%), whichever is lower.
The maximum interest rate on Plan 1 Income Contingent Repayment Loans during the period 1 September 2026 until 31 August 2027 will be 4.1%, the applicable rate of RPI for the period.
Subject to any decrease in the Bank base rate from 1 September, the interest rate will be set at RPI 4.1%.
Please monitor this website regularly as the rates may change during the academic year.
The repayment threshold for Plan 1 loans will rise to £28,005 from 6 April 2027 to 5 April 2028.
Income Contingent Student Loans for Plan 2 (2012-2023) undergraduate loans
The applicable RPI rate is 4.1% for the period 1 September 2026 to 31 August 2027. Interest rates for Plan 2 income contingent student loans vary between RPI (4.1%) and RPI +3% (7.1%) depending on your circumstances. However, as announced on 7 April 2026, the maximum interest rate applied to plan 2 loans will be capped at 6% between 1 September 2026 to 31 August 2027.
| Your circumstances | Interest rate |
|---|---|
| Whilst studying and until the April after leaving the course | RPI + 3% (7.1%), with a 6% cap applied between 1 September 2026 to 31 August 2027 |
| Post-study | Variable interest, dependent upon income. RPI (4.1%), rising on a sliding scale up to RPI + 3% (7.1%), with a 6% cap applied between 1 September 2026 to 31 August 2027 |
Interest rates are subject to any caps to reflect the Prevailing Market Rate.
Income Contingent Student Loans for Plan 5 (from 2023 academic year) undergraduate loans
The applicable RPI rate is 4.1% for the period 1 September 2026 to 31 August 2027. The interest rate for Plan 5 is RPI (4.1%).
This rate is subject to any caps to reflect the Prevailing Market Rate.
Income Contingent Student Loans for Plan 3 postgraduate loans
The applicable RPI rate is 4.1% for the period 1 September 2026 to 31 August 2027. The interest rate for Plan 3 is RPI + 3% (7.1%). However, as announced on 7 April 2026, the maximum interest rate applied to plan 3 loans will be capped at 6% between 1 September 2026 to 31 August 2027.
This rate is subject to any caps to reflect the Prevailing Market Rate.
Mortgage Style Loans
From 1 September 2026 until 31 August 2027, the interest rate for mortgage style loans will be RPI, that is, 4.1%.
The deferment threshold for mortgage style loans to apply from 1 September 2026 until 31 August 2027 will be £44,311.
Any queries from borrowers who have mortgage style loans should be addressed to their loan administrator.
source: GOV
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