Student Loan Interest Rate Caps

Monday 15th May 2023 Written Statements

[The Minister for Skills, Apprenticeships and Higher Education (Robert Halfon)]

My noble Friend the Parliamentary Under Secretary of State for Education, Baroness Barran, has made the following statement:

The Government announced on 13 June 2022 that the student loan interest rate would be set at a maximum of 7.3% between 1 September 2022 and 31 August 2023, in line with the forecast prevailing market rates. The Government confirmed that should the actual prevailing market rate turn out to be lower than forecast, a further cap would be implemented to reduce student loan interest rates accordingly.

Reflecting a lower than forecast prevailing market rate across the academic year 2023-24, the maximum interest rates for all plan 2 (undergraduate) and plan 3 (postgraduate) loans have been:

6.3% between 1 September 2022 to 30 November 2022;

6.5% between 1 December 2022 and 28 February 2023; and

6.9% between 1 March 2023 and 31 May 2023.

I am now announcing a further cap: from 1 June 2023 to 31 August 2023 the maximum interest rate will be 7.1% for all plan 2 and plan 3 loans, reflecting the most recent prevailing market rate. For the first time, this cap will also apply to plan 5 (undergraduate) loans, which become available from 1 August. The temporary cap is a reduction compared to the 7.3% maximum rate announced in June.

We will confirm student loan interest rates to apply from 1 September 2023 closer to the time.

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