Student loan interest rates are reset every September, and a lot of what's written about them online is simply out of date within weeks of the new figures landing. The rate you're charged depends on which plan you're on and, for two of the five plans, your income too, so "the" student loan interest rate isn't really one number at all.
This guide covers the rate for each plan as it stands right now, how it's actually calculated rather than just quoted, and the mechanism that lets it move mid-year in some circumstances. To see what a given rate does to your balance over time, our student loan calculator lets you edit the rate directly and models the effect year by year.
Current Rates for Every Plan
These figures apply from 1 September 2026 to 31 August 2027, confirmed by the Department for Education on 10 August 2026.
| Plan | Rate | How it's set |
|---|---|---|
| Plan 1 | 4.1% | Lower of RPI or Bank of England base rate + 1% |
| Plan 2 | Up to 6% | RPI + 3% while studying, then income-linked, capped at 6% |
| Plan 4 | 4.1% | Same formula as Plan 1 |
| Plan 5 | 4.1% | RPI only, no margin added |
| Postgraduate | 6% | RPI + 3%, capped at 6% |
If you've seen 3.2% quoted anywhere, that's last year's figure. RPI moved from 3.2% to 4.1% for the current period, and several widely-shared calculators and guides hadn't been updated with the new rate at the time of writing. Always check the date on anything quoting a specific percentage.
How Each Rate Is Actually Set
Plan 1 and Plan 4 use the same formula: whichever is lower, RPI or the Bank of England base rate plus 1%. With RPI at 4.1% and the base rate at 3.75% (held at 3.75% on 30 July 2026), base rate plus 1% comes to 4.75%, so RPI is the lower figure and becomes the rate charged. This formula exists specifically to stop these two older loan types from becoming unusually expensive relative to normal borrowing costs.
Plan 5 is simpler still. It charges RPI with no margin added at all, which is a deliberate design choice from the 2023 reforms: a longer write-off period paired with the lowest available interest rate, rather than the higher rate and shorter term that Plan 2 uses.
Plan 2 and Postgraduate loans work differently again. While you're studying and until the April after you leave your course, the rate is a flat RPI + 3%. After that, for Plan 2 specifically, it moves onto a sliding scale based on your income: the lowest earners pay something close to RPI alone, and the rate rises gradually toward RPI + 3% as income increases, historically running from the repayment threshold up to roughly £20,000 above it. Postgraduate loans don't have this income-linked step and simply charge RPI + 3% throughout.
The 6% Cap, and Who It Doesn't Cover
For 1 September 2026 to 31 August 2027, the government has capped interest at 6% for Plan 2 and Postgraduate loans specifically. Without the cap, the formula above would let Plan 2 and Postgraduate rates reach RPI + 3%, currently 7.1%, for higher earners. The cap simply stops the rate going above 6% regardless of what the underlying formula would otherwise produce.
This is the detail most likely to trip you up: the cap only applies to Plan 2 and Postgraduate loans. Plan 1, Plan 4 and Plan 5 were never going to reach 6% under their own formulas this year anyway, since all three are sitting at 4.1%, so the cap is irrelevant to them rather than an additional protection. It's also not a permanent feature of the system. The government reviews and confirms this figure annually, and there's no guarantee it will still be 6% from September 2027 onward.
Why Rates Can Move Mid-Year
Separately from the annual September reset, there's a second mechanism called the Prevailing Market Rate cap, reviewed monthly rather than annually. Its job is to stop student loan interest from significantly exceeding what commercial lenders are charging on comparable unsecured borrowing.
This isn't a theoretical safeguard. In early 2024, RPI spiked to 13.5% following the inflation surge of the preceding years, which would have meant an extremely high headline rate under the standard formula. The Prevailing Market Rate cap intervened and forced the actual rate down to 7.6% instead. It's a useful reminder that any interest rate you see quoted, including everything in this guide, is a snapshot rather than a fixed promise for the life of your loan.
What the Rate Gap Actually Costs
Comparing a Plan 5 balance at 4.1% against a Plan 2 balance at the capped 6% rate, on an identical starting balance.
That gap compounds every year the balance isn't cleared, which is exactly why the plan you're on matters more than most people realise when comparing loans, even before factoring in the different thresholds and write-off periods each plan uses. For borrowers likely to hit write-off rather than clear the balance, though, the interest rate itself matters less than it looks, since what gets written off gets written off regardless of size. Our guide to student loan write-off covers exactly when that applies.
Common Mistakes
Ask the Student Loans Company: your online SLC account shows the exact rate currently applied to your specific loan, rather than the general figure for your plan, which is worth checking directly if anything here looks like it doesn't match your statement.