Blitz Bureau
NEW DELHI: The UK Government has caped the maximum interest rates on Plan 2 and 3 student loans at 6 per cent from September 1, for the 2026-27 academic year, according to an official statement. The measure will protect students and graduates in England and Wales from the potential of inflation pressures due to the situation in the Middle East. Graduates will not pay the price for a war which the UK has no direct involvement in.
It said this reform will remove the risk of any temporary increase in inflation causing loan balances to compound at an unsustainable rate and is in line with actions taken in the past to secure stability in the student finance system. Graduates with Plan 2 loans currently pay interest rates of between RPI and RPI plus 3 per cent, depending on their earnings. Current students on Plan 2 and Plan 3 also attract an interest rate of RPI 3 per cent while they are studying. It said the Government is continuing work to make the finance system fairer for students, graduates and taxpayers.
Minister for Skills, Jacqui Smith, said, “We know that the conflict in the Middle East is causing anxiety at home, and while the risk of global shocks is beyond our control, protecting people here is not. “Capping the maximum interest rate on Plan 2 and Plan 3 student loans will provide immediate protection for borrowers, supporting those who are most exposed within this already unfair system.
We’re acting now to defend against the consequences of far-away conflicts in an uncertain world. More broadly, we’re bringing back maintenance grants and continuing to look at the broken Plan 2 system we inherited, and the wider student finance system, to make it fairer for students, graduates and taxpayers”.
