Student loan interest rates are changing again, with borrowers across every repayment plan seeing an increase from September 2026.

The new rates, confirmed by the Department for Education (DfE), will apply from 1 September 2026 to 31 August 2027. There is some protection for borrowers on Plans 2 and 3, however, with the Government retaining a 6% cap which prevents the maximum rate reaching 7.1%.

For Plan 1 borrowers, generally those who started undergraduate courses between 1998 and 2012, the interest rate will rise to 4.1%, based on the retail prices index (RPI). That compares with 3.2% in 2025/26, although it remains slightly below the 4.3% charged in 2024/25.

Those on Plan 2, broadly covering undergraduates who started courses between 2012 and 2023, will pay interest of between 4.1% and 6%, depending on their income. Without the Government cap, the maximum rate would have increased to 7.1%. For comparison, the maximum was 6.2% in 2025/26 and 7.3% in 2024/25.

Plan 3 postgraduate borrowers will also pay 6%. Again, the cap prevents the rate reaching 7.1%, compared with rates of 6.2% last year and 7.3% the year before.

Finally, Plan 5 applies to borrowers who began undergraduate courses in 2023 or later. Their interest rate will increase from 3.2% to 4.1% for 2026/27, still slightly below the 4.3% charged in 2024/25.

Of course, student loans don't work in quite the same way as conventional borrowing. What you actually repay is determined by the rules and income thresholds for your particular plan, rather than simply by the size of the outstanding balance.

Nevertheless, with rates increasing across the board, it is worth knowing which plan you're on and understanding how the system affects your wider finances – particularly if you're considering whether making additional repayments makes sense.

Not sure how your student loan fits into the bigger financial picture? Get in touch and we can talk through the numbers.