GovWire

Guidance: How interest is calculated - Plan 2

Student Loans Company

March 1
11:37 2023

When interest is applied

Youre 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.

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 youre not being charged a higher interest rate than the average found in the commercial market.

What is the Retail Price Index?

Its 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 interest rates set by commercial banks using monthly data provided by the Bank of England.

If the average commercial interest rate is lower than the interest rate youre being charged on your Plan 2 loan, well apply a temporary interest rate cap, so youre not disadvantaged. The interest rate will be reviewed after 3 months and changed if necessary.

The current interest rate is capped at 6.9%.

Previous interest rates

The rates in the table apply to Plan 2 loans only. The amounts shown are the maximum for each period. Depending on your income, the interest rate you were charged might have been lower than the maximum shown.

Date Interest rate
1 December 2022 to 28 February 2023 6.5%
1 September 2022 to 30 November 2022 6.3%
1 March 2022 to 31 August 2022 4.5%
1 January 2022 to 28 February 2022 4.4%
1 October 2021 to 31 December 2021 4.1%
1 September 2021 to 30 September 2021 4.2%
1 July 2021 to 31 August 2021 5.3%
1 September 2020 to 30 June 2021 5.6%
1 September 2019 to 31 August 2020 5.4%
1 September 2018 to 31 August 2019 6.3%
1 September 2017 to 31 August 2018 6.1%
1 September 2016 to 31 August 2017 4.6%
1 September 2015 to 31 August 2016 3.9%
1 September 2014 to 31 August 2015 5.5%
1 September 2013 to 31 August 2014 6.3%
1 September 2012 to 31 August 2013 6.6%
Published 15 May 2019
Last updated 1 March 2023 +show all updates
  1. Updates have been made to the previous interest rates table

  2. Updates have been made to the previous interest rates table

  3. Updates have been made to the current interest rate

  4. The interest rate has been updated, there is no interest rate cap currently. Previous interest rate table has also been updated.

  5. Updates have been made to the current interest rate cap and the previous interest rates table.

  6. Updates made to the current interest rate cap and previous interest rates table.

  7. Current interest rate cap updated to 4.2%1 July 2021 to 31 August 2021 - 5.3% added to the previous interest rates table.

  8. Interest rate information updated due to cap being applied.

  9. Updated table with interest rate for 2018/19

  10. First published.

Related Articles

Comments

  1. We don't have any comments for this article yet. Why not join in and start a discussion.

Write a Comment

Your name:
Your email:
Comments:

Post my comment

Recent Comments

Follow Us on Twitter

Share This


Enjoyed this? Why not share it with others if you've found it useful by using one of the tools below: