Graduates on Plan 2 loans, effectively those who started university between 2012 and 2023, are charged interest at RPI rate, plus up to 3%, depending on the amount they are earning. With current RPI running at 4.2%, this figure is higher than CPI at 3.4%.

The amount of additional debt Plan 2 graduates have accrued on top of their initial loan has been making headlines, most recently with a fiery debate on BBC’s Question Time, where it was described as ‘the next mis-selling scandal’, picking up on criticism by personal finance expert Martin Lewis.

The average graduate debt for students on Plan 2 loans after leaving university rose to £53,000 in 2024-25, which was £5,000 higher than £47,000 just a year earlier.