Student loans interest rates and repayment announcement

19 August 2025

The Department for Education today (19 August 2025) confirmed annual updates to interest rates for undergraduate and postgraduate Income Contingent Student Loans, repayment thresholds for Plan 1 and Plan 5 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 3.2% for the period 1 September 2025 to 31 August 2026. The interest rate for Plan 1 income-contingent repayment student loans is RPI (3.2%) or the Bank Base Rate (currently 4%) + 1% (5%), whichever is lower.

The maximum interest rate on Plan 1 Income Contingent Repayment Loans during the period 1 September 2025 until 31 August 2026 will be 3.2%, 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 3.2%.

Please monitor this website regularly as the rates may change during the academic year.

The repayment threshold for Plan 1 loans will rise to £26,900 from 6 April 2026 to 5 April 2027.

Income Contingent Student Loans for Plan 2 (2012-2023) undergraduate loans

The applicable RPI rate is 3.2% for the period 1 September 2025 to 31 August 2026. Interest rates for Plan 2 income contingent student loans vary between RPI (3.2%) and RPI (3.2%) +3% (6.2%) depending on your circumstances.

Your circumstances	Interest rate
Whilst studying and until the April after leaving the course	RPI (3.2%) + 3% (6.2%)
Post-study.	Variable interest, dependent upon income. RPI (3.2%), rising on a sliding scale up to RPI + 3% (6.2%)

Interest rates are subject to any caps to reflect the Prevailing Market Rate.

The income threshold and lower and higher interest thresholds for repayment of Plan 2 loans to apply from April 2026 will be announced in due course.

Income Contingent Student Loans for Plan 5 (from 2023 academic year) undergraduate loans

The applicable RPI rate is 3.2% for the period 1 September 2025 to 31 August 2026. The interest rate for Plan 5 is RPI (3.2%) + 0%. This rate is subject to any caps to reflect the Prevailing Market Rate.

The income threshold for repayment of Plan 5 loans due to come into repayment from April 2026 is £25,000.

Postgraduate Loans – Plan 3

The applicable RPI rate is 3.2% for the period 1 September 2025 to 31 August 2026. The maximum interest rate for Postgraduate Master’s or Doctoral loans is RPI (3.2%) plus 3% (6.2%).

This rate is subject to any caps to reflect the Prevailing Market Rate.

The income thresholds for repayment of Postgraduate Masters and Doctoral Loans to apply from April 2026 will be announced in due course.

Mortgage Style Loans

From 1 September 2025 until 31 August 2026, the interest rate for mortgage style loans will be RPI, that is, 3.2%.

The deferment threshold for mortgage style loans to apply from 1 September 2025 until 31 August 2026 will be £41,613.

Any queries from borrowers who have mortgage style loans should be addressed to their loan administrator.

source: GOV