The Department for Education (DfE) has confirmed that the maximum Plan 2 and the postgraduate loan (PGL) interest rate will be 6.9% between 1 March 2023 and 31 May 2023.

The loan rate could have risen by the current rate of inflation, but the government stepped in to prevent such a punitive rise.

From 1 June 2023 to 31 August 2023 the maximum Plan 2 and the PGL interest rate will be capped at 7.3%, the forecast prevailing market rate for the 2022/23 academic year. In a statement, the Student Loans Company said: ‘Should the actual prevailing market rate turn out to be lower than forecast, a further cap would be implemented to reduce student loan interest rates accordingly.’

From 1 September 2022 to 30 November 2022, the maximum Plan 2 and postgraduate loan (PGL) interest rate was set at 6.3% for all Plan 2 and PGL borrowers.

Where the government considers that the student loan interest rate is too high in comparison to the prevailing market rate, it will reduce the maximum Plan 2 and Postgraduate Loan interest rate by applying a cap for a set period of three months (or longer, if the prevailing market rate remains below the student loan rate at the next monitoring point).

Plan 2 borrowers will continue to repay 9% of their earnings over the repayment threshold. The repayment threshold for Plan 2 ICR loans is £27,295 for FY22-23.

Plan 2 ICR loans are those loans taken out for a course starting after 1 September 2012 (England and Wales).

Postgraduate loan borrowers will continue to repay 6% of their earnings over the repayment threshold. The repayment threshold for postgraduate loans is £21,000 for FY22-23.

Plan 1 ICR loans, those loans taken out for a course starting before 1 September 2012 are not affected.

More information is available at Student loans, funding and finance for students