Plan 2 student loan interest rates capped at 6% in England

Plan 2 student loan interest rates in England have been capped at 6%, according to BBC News.

The report was published on Tuesday morning and said the cap is being introduced amid concern about inflation. It affects borrowers on the Plan 2 system in England, which is the main repayment plan for many university leavers.

Official GOV.UK guidance shows that Plan 2 rates are variable and can be capped when the prevailing market rate falls below the student-loan rate. The wider student-loan rules also cover Plan 5 and postgraduate borrowing, but the BBC report specifically framed the latest change around Plan 2 in England.

The move comes as student finance rules continue to shift in 2026. The House of Commons Library says the Plan 2 repayment threshold in England rises to £29,385 from April 2026, before being frozen for three years from April 2027.

For borrowers, the headline issue is that interest rates can affect how quickly balances grow, even when monthly repayments are tied to income. The new cap is therefore likely to be watched closely by graduates who are already repaying their loans or expect to start soon.

More detail may follow if the Department for Education publishes a formal announcement setting out how long the 6% cap will remain in place.