How interest is calculated - Plan 2
Find out how interest is calculated and applied if you have a Plan 2 student loan, as well as previous interest rates.
When interest is applied
You’re charged interest from the day we make your first payment to you or to your university or college until your loan has been repaid in full or cancelled.
Interest is added to your balance each month even if your income is below the Plan 2 repayment threshold.
Annual interest rate changes
The interest rate is usually set on 1 September each year, based on the Retail Price Index of the previous March.
The interest rate charged is normally the Retail Price Index plus up to 3%, depending on your circumstances and income.
However, during some periods we may apply an interest cap to ensure you’re not being charged a higher interest rate than comparable rates found in the commercial market.
What is the Retail Price Index?
It’s a measure of inflation, which measures changes to the cost of living in the UK.
What is the interest rate cap?
The Department for Education monitors comparable market rates using monthly data published by the Bank of England.
If the average comparable market rate is lower than the interest rate you’re being charged on your Plan 2 loan, we’ll apply a temporary interest rate cap, so you’re not disadvantaged. The comparable market rate is reviewed monthly and a change to the interest rate cap made if necessary.
The interest rate cap is not currently being applied.
Previous interest rates
The rates in the table apply to Plan 2 loans only.
When the interest rate cap is in place, it is applied to all Plan 2 loans. The interest rate cap is not based on your income.
When the Retail Price Index plus up to 3% (RPI+3%) is in place, the amount of interest added to your loan is based on your income.
When the Retail Price Index (RPI) up to the interest cap is in place, the amount of interest added to your loan is based on your income. The interest applied will not be higher than the interest rate cap.
Interest rates applied in 2024
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 September 2024 to 31 August 2025 | 4.3% to 7.3% | RPI+3% |
| 1 August 2024 to 31 August 2024 | 8% | Interest cap |
| 1 June 2024 to 31 July 2024 | 7.9% | Interest cap |
| 1 April 2024 to 31 May 2024 | 7.8% | Interest cap |
| 1 March 2024 to 31 March 2024 | 7.7% | Interest cap |
| 1 January 2024 to 29 February 2024 | 7.6% | Interest cap |
Interest rates applied in 2023
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 December 2023 to 31 December 2023 | 7.5% | Interest cap |
| 1 September 2023 to 30 November 2023 | 7.3% | Interest cap |
| 1 June 2023 to 31 August 2023 | 7.1% | Interest cap |
| 1 March 2023 to 31 May 2023 | 6.9% | Interest cap |
Interest rates applied in 2022
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 December 2022 to 28 February 2023 | 6.5% | Interest cap |
| 1 September 2022 to 30 November 2022 | 6.3% | Interest cap |
| 1 March 2022 to 31 August 2022 | 1.5% to 4.5% | RPI+3% |
| 1 January 2022 to 28 February 2022 | 1.5% to 4.4% | RPI up to interest cap |
Interest rates applied in 2021
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 October 2021 to 31 December 2021 | 1.5% to 4.1% | RPI up to interest cap |
| 1 September 2021 to 30 September 2021 | 1.5% to 4.2% | RPI up to interest cap |
| 1 July 2021 to 31 August 2021 | 2.6% to 5.3% | RPI up to interest cap |
Interest rates applied in 2020
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 September 2020 to 30 June 2021 | 2.6% to 5.6% | RPI+3% |
Interest rates applied in 2019
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 September 2019 to 31 August 2020 | 2.4% to 5.4% | RPI+3% |
Interest rates applied in 2018
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 September 2018 to 31 August 2019 | 3.3% to 6.3% | RPI+3% |
Interest rates applied in 2017
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 September 2017 to 31 August 2018 | 3.1% to 6.1% | RPI+3% |
Interest rates applied in 2016
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 September 2016 to 31 August 2017 | 1.6% to 4.6% | RPI+3% |
Interest rates applied in 2015
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 September 2015 to 31 August 2016 | 0.9% to 3.9% | RPI+3% |
Interest rates applied in 2014
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 September 2014 to 31 August 2015 | 2.5% to 5.5% | RPI+3% |
Interest rates applied in 2013
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 September 2013 to 31 August 2014 | 3.3% to 6.3% | RPI+3% |
Interest rates applied in 2012
| Date | Interest rate | Interest rate type |
|---|---|---|
| 1 September 2012 to 31 August 2013 | 3.6% to 6.6% | RPI+3% |
Updates to this page
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Updated guidance on the interest rate cap.
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Plan 2 loan interest rate increased to 8%.
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Previous interest rates table has been updated
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Current interest rate and previous interest rates table have been updated
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Previous interest rates table has been updated
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Interest rate information has been updated
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The current interest rate cap and previous interest rates table have been updated
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Previous interest rates table has been updated
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The interest rate cap and previous interest rates table have been updated.
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Updates have been made to the previous interest rates table
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Updates have been made to the previous interest rates table
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Updates have been made to the current interest rate
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The interest rate has been updated, there is no interest rate cap currently. Previous interest rate table has also been updated.
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Updates have been made to the current interest rate cap and the previous interest rates table.
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Updates made to the current interest rate cap and previous interest rates table.
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Current interest rate cap updated to 4.2% 1 July 2021 to 31 August 2021 - 5.3% added to the previous interest rates table.
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Interest rate information updated due to cap being applied.
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Updated table with interest rate for 2018/19
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First published.