Announcing Student Loan Interest Rates and Repayment Threshold

The Department for Education (DfE) today (10 August 2022) confirmed annual updates to interest rates and repayment thresholds for income-related student loans, as well as interest rates and the deferment threshold for mortgage-type student loans.

Income-Based Student Loans

Undergraduate Loans

Income-Based Student Loans for Pre-2012 Loans (Plan 1)

The interest rate on pre-2012 income-contingent student loans is the RPI or the bank’s prime rate + 1%, whichever is lower. The low interest rate ceiling is in effect and therefore the rate to be applied from 1 September 2022 will be the bank base rate (1.75%) + 1%, i.e. 2.75%. This rate can be adjusted during the year, if and when the bank prime rate changes.

If the low interest rate cap no longer applies during the year, the interest rate on Plan 1 income-contingent loans during the period September 1, 2022 to August 31, 2023 will be 9%, the RPI rate applicable for the period from September 1, 2022 to August 31, 2023.

Please check this website regularly as rates may change during the academic year.

From 6 April 2023, the repayment threshold for pre-2012 loans (Plan 1) will increase to £22,015.

Income-Conditional Student Loans for Post-2012 Loans (Plan 2)

Interest rates for student loans based on income after 2012 vary between RPI and RPI + 3%, depending on your situation. These rates are subject to caps to reflect the prevailing market rate.

Current market rate ceiling:

From September 1, 2022 to August 31, 2023, the interest rate for borrowers on a post-2012 (Plan 2) loan will be a maximum of 7.3%, as announced by DfE Ministers on June 11, 2022.

From September 1, 2022 to November 30, 2022:

The interest rate will be 6.3% for all post-2012 (Plan 2) loans, reflecting a further reduction in the prevailing market rate.

From December 1, 2022 to August 31, 2023:

The interest rate will be 7.3% as announced on June 11, 2022.

The income threshold for post-2012 (Plan 2) from April 2023 will be £27,295.

Postdoctoral loans

The interest rate for postgraduate master’s or doctoral loans is RPI plus 3%. This rate is subject to caps to reflect the prevailing market rate.

Current market rate ceiling:

From September 1, 2022 to August 31, 2023, the interest rate on a postgraduate Masters or PhD loan will be a maximum of 7.3%, as announced by DfE Ministers on June 11, 2022.

From September 1, 2022 to November 30, 2022:

The interest rate will be 6.3% for postgraduate loans, reflecting a further reduction in the prevailing market rate ceiling.

From December 1, 2022 to August 31, 2023

The maximum interest rate will be 7.3% as announced on June 11, 2022.

Income thresholds for postgraduate masters and doctoral loans to apply from April 2023 will be announced in due course.

Mortgage type loans

From September 1, 2022 to August 31, 2023, the mortgage interest rate will be RPI, or 9%.

The deferment threshold for mortgages will be £35,092.

All questions from borrowers who have mortgages should be directed to their loan servicer.

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