Andy Burnham announces huge change for anyone with student loan.TA

The Government has unveiled a significant change for anyone holding a student loan, with interest rates and repayment thresholds set to alter.

The announcement follows the Department for Education’s confirmation of its annual updates to interest rates and repayment thresholds for student loans, on Monday.

The department has released its new interest rates for undergraduate and postgraduate loans; the revised repayment thresholds for Plan 1 loans; and the interest rates and deferment threshold for Mortgage Style Student Loans.

The revised interest rates are poised to impact the RPI rates for student loans – the baseline inflation measure. The government utilises the RPI figure from March each year to establish the foundation for student loan interest rates beginning in September, reports the Manchester Evening News.

According to your plan, you will incur RPI plus up to an additional 3%. In today’s update, it has been confirmed that RPI rates stand at 4.1% for anyone repaying their loan from September 1.

Student loans are changing again (Image: PA)

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The repayment threshold for Plan 1 loans has likewise been modified. Last year’s rate stood at 3.2%.

Below are the complete details of how the update will impact different student loan plans:

Plan 1 Student Loans.

• The applicable RPI rate is now 4.1% for the period of September 1, 2026 to August 31, 2027
• The interest rate for Plan 1 income-contingent repayment student loans is RPI (4.1%) or the Bank Base Rate + 1% (currently 4.75%), whichever is lower
• The maximum interest rate on Plan 1 Income Contingent Repayment Loans during the period September 1, 2026 until August 31, 2027 will be 4.1%, the applicable rate of RPI for the period
• Subject to any decrease in the Bank base rate from September 1, the interest rate will be set at RPI 4.1%
• The repayment threshold for Plan 1 loans will rise to £28,005 from April 6, 2027 to April 5, 2028. It had been £26,900

Plan 2 Student Loans.

• The applicable RPI rate is now 4.1% for the period September 1, 2026 to August 31, 2027
• Interest rates for Plan 2 income contingent student loans vary between RPI (4.1%) and RPI +3% (7.1%) depending on your circumstances
• The maximum interest rate applied to plan 2 loans will be capped at 6% between September 1, 2026 to August 31, 2027

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

Plan 5 Student Loans

• The applicable RPI rate is now 4.1% for the period September 1, 2026 to August 31, 2027
• This rate is subject to any caps to reflect the Prevailing Market Rate

Plan 3 Student Loans

• The applicable RPI rate is now 4.1% for the period September 1, 2026 to August 31, 2027
• The interest rate for Plan 3 is RPI + 3% (7.1%)
• The maximum interest rate applied to plan 3 loans will be capped at 6% between September 1, 2026 to August 31, 2027
• This rate is subject to any caps to reflect the Prevailing Market Rate

The Department for Education recommends that those impacted should frequently check its website, as the rates could be adjusted throughout the academic year.