RPI 4.1% · Plan 2 up to 6% (capped) · Plan 1, 4 and 5 4.1% · Postgraduate 6% — 1 Sept 2026 to 31 Aug 2027
ESTIMATE
Illustrative estimates for the 2026/27 tax year (6 April 2026 – 5 April 2027) as of 3 November 2026 — not financial advice. Thresholds from GOV.UK; interest rates for 1 September 2026 – 31 August 2027 from the Student Loans Company. Your payslip may differ by a pound or two because payroll rounds each pay period.
UK student loan interest is based on the Retail Prices Index (RPI) for the March before each academic year. March 2026 RPI was 4.1%, so from 1 September 2026 to 31 August 2027 Plans 1, 4 and 5 charge 4.1%, Plan 2 charges 4.1% to 6% depending on your income, and Postgraduate Loans charge 6% — the last two held down by a temporary 6% cap.
Plan 2 interest by income, 2026/27
Gold = rate charged (with the 6% cap); dashed = normal RPI + 0–3% scale. Marker shows £40,000.
Step 1: the RPI figure sets the base rate
Each year the Department for Education takes the RPI annual inflation rate for March and applies it from 1 September for twelve months. RPI for March 2026 was 4.1%, announced by the Student Loans Company on 10 August 2026. Rates can be changed during the year if they exceed the “prevailing market rate” for comparable commercial loans — the legal cap that has been used several times since 2022.
Step 2: each plan applies its own rule
Plan 1 and Plan 4: the lower of RPI or Bank Rate + 1%. Bank Rate is 3.75%, so the alternative would be 4.75%, and the rate is 4.1%. If Bank Rate fell below 3.1%, Plan 1 and 4 interest would fall with it.
Plan 2 while studying (and until the April after you leave): RPI + 3% = 7.1%, capped at 6% for 2026/27.
Plan 2 after study: a sliding scale from RPI (4.1%) at incomes up to £29,385 to RPI + 3% (7.1%) at £52,885 or more. The 6% cap means nobody pays more than 6% this year; the cap is reached at about £44,268.
Plan 5: RPI only — 4.1% — for everyone, during and after study.
Postgraduate Loan: RPI + 3% = 7.1%, capped at 6%.
Step 3: the Plan 2 sliding scale in detail
For incomes between the two thresholds, the extra interest above RPI rises in a straight line. The formula is: RPI + 3% × (income − £29,385) ÷ (£52,885 − £29,385). At £40,000, that is 4.1% + 3% × 10,615 ÷ 23,500 = 5.46%. The SLC uses the income information it receives from HMRC or your employer; if it has no up-to-date income information it can apply the maximum rate.
Income
Normal Plan 2 rate
Rate with 6% cap
Interest a year on £45,000
Per day
£25,000
4.10%
4.10%
£1,845
£5.05
£29,385
4.10%
4.10%
£1,845
£5.05
£35,000
4.82%
4.82%
£2,168
£5.94
£40,000
5.46%
5.46%
£2,455
£6.73
£44,268
6.00%
6.00%
£2,700
£7.40
£52,885
7.10%
6.00%
£2,700
£7.40
£60,000
7.10%
6.00%
£2,700
£7.40
See your full payslip
Add your student loan plan to the UK take-home pay calculator to see income tax, National Insurance, pension and loan repayments together for 2026/27.
Interest accrues every day on the outstanding balance, from the day the first payment is made to you or your university. A £45,000 balance at 6% builds up about £7.40 of interest a day — roughly £2,700 a year. Because repayments are based on income rather than the balance, many graduates see their balance rise in the early years: a Plan 2 graduate on £35,000 repays £504 a year, while £45,000 at 4.82% adds £2,168.
How rates have moved
Academic year
RPI used
Plan 2 range
Plan 5
Postgraduate
Sept 2024 – Aug 2025
4.3%
4.3% – 7.3%
4.3%
7.3%
Sept 2025 – Aug 2026
3.2%
3.2% – 6.2%
3.2%
6.2%
Sept 2026 – Aug 2027
4.1%
4.1% – 6.0% (cap)
4.1%
6.0% (cap)
Academic years run 1 September – 31 August. 2026/27 maximum capped at 6% (would otherwise be 7.1%).
The 6% cap was announced on 7 April 2026 as a short-term measure for the 2026/27 academic year only. Unless it is extended, Plan 2 and Postgraduate Loan rates from September 2027 will go back to RPI + up to 3%, using March 2027 RPI.
Does interest change what you pay each month?
No — and this is the most misunderstood part of student loans. Interest only changes the balance, which matters for how long you repay and whether anything is written off. Your monthly deduction depends purely on your income and threshold. That is why overpaying is not automatically sensible, and why the interest rate matters most to graduates who will clear their loans in full.
FAQ
What is the student loan interest rate for 2026/27?
From 1 September 2026 to 31 August 2027: Plan 1, Plan 4 and Plan 5 4.1%; Plan 2 4.1% to 6% depending on income; Postgraduate Loans 6%. The Plan 2 and Postgraduate rates would be up to 7.1% without the temporary 6% cap.
How is Plan 2 interest calculated?
After you leave your course, Plan 2 interest is RPI (4.1%) on incomes up to £29,385, rising in a straight line to RPI + 3% at £52,885. For 2026/27 the maximum is capped at 6%, reached at an income of about £44,270.
Why is my student loan balance going up?
Interest is charged on the whole balance, while repayments are only 9% of income above the threshold. If the interest added is larger than your repayments, the balance rises even though you are paying.
Is student loan interest based on RPI or CPI?
RPI. The rate for each academic year starting 1 September uses the RPI figure for the previous March.
Does the interest rate affect my monthly repayments?
No. Monthly repayments depend only on income above your plan threshold. Interest only affects the balance and how long you will repay.
GOV.UK, Repaying your student loan – what you pay: 2026/27 thresholds Plan 1 £26,900, Plan 2 £29,385, Plan 4 £33,795, Plan 5 £25,000, Postgraduate Loan £21,000; 9% (6% for PGL) of income above the threshold; rules for more than one plan (read 3 November 2026).
Student Loans Company / Department for Education, Student loans interest rates and repayment threshold announcement, 10 August 2026: RPI 4.1%; Plan 1 4.1%; Plan 2 4.1%–7.1% capped at 6%; Plan 3 (Postgraduate) capped at 6%; Plan 5 4.1% (1 Sep 2026 – 31 Aug 2027); Plan 1 threshold £28,005 from 6 April 2027.
Department for Education press release, Interest rate cap introduced to protect Plan 2 borrowers, 7 April 2026, and written ministerial statement of 13 April 2026: 6% cap for 2026/27; Plan 2 upper interest threshold £52,885 from 6 April 2026.
Autumn Budget 2025 (26 November 2025): Plan 2 repayment threshold frozen at £29,385 for 2027/28 to 2029/30 (reported by Which?, 5 December 2025).
Take-home pay: HMRC 2026/27 income tax and National Insurance for England, Wales and Northern Ireland (personal allowance £12,570, 8%/2% employee NI), as used on our UK salary after tax pages.