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Plan 2 - Interest rates

 

You‘re charged interest from the day your first payment is made until your loan is repaid in full. Interest is added to the total amount you owe every month.


The interest rate is based on the UK Retail Price Index (RPI) and will vary depending on your circumstances.


The interest rate is updated once a year in September, using the RPI from March of that year.


What is RPI?

RPI - The Retail Price Index, RPI, is a measure of UK inflation. It measures changes to the cost of living in the UK. The UK government uses the rate of RPI for many purposes, including setting the interest rate charged on student loans.

Your circumstances Interest rate
Whilst studying and until the April after leaving the course RPI plus 3% (4.6% for 2016/17)
From 6 April after leaving your course until the loan is repaid in full Variable rate dependent upon income. RPI (1.6%) where income is £21,000 or less, rising on a sliding scale up to RPI plus 3% (4.6%) where income is £41,000 or more
If you don’t respond to our requests for information or evidence RPI plus 3%,(4.6%) irrespective of income, until we have all the information we need

Getting charged more than one rate of interest in the same month

This can happen if you have two or more Plan 2 loans for different courses.

For example, if you started and left a course before 6th April 2015 then started a new course after that – and took a loan out for each of those courses – you’d be charged:

  • a rate of RPI for the loan from your first course from 6th April after you left the course until 5th April 2016; and
  • a rate of RPI plus 3% for the loan from your second course until the April after you complete or leave your second course.

Keeping us up to date

If you don't respond to our requests for information or evidence, an interest rate of RPI plus 3% will be applied to your loan even if you are earning under £41,000.



Historical Interest Rate

The rates in the below table are for Plan 2 loans only and, unless otherwise indicated, apply to the period 1st September to 31st August for the years advised.

Year Interest rate
2012/13 RPI (3.6%) plus 3% = (6.6%)
2013/14 RPI (3.3%) plus 3% = (6.3%)
2014/15 RPI (2.5%) plus 3% = (5.5%)
2015/16 RPI (0.9%) plus 3% = (3.9%)
2016/17 RPI (1.6%) plus 3% = (4.6%)

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