On Aug. 30, UK GVT reported change to Plan 1 student loan rate.
UK GVT reported Plan 1 student loan interest rate for Sep. 1, 2023 to Aug. 31, 2024.
Decision made by Department for Education (DfE), Welsh Government, and Department for the Economy in Northern Ireland (DfE NI) confirmed change to 6%.
Follows UK GVT Aug. 2024 confirm annual interest, threshold updates, see #222658.
Calculation of Plan 1 Interest Rate
Plan 1 student loans have an interest rate of either RPI (from Mar. prior to Sep when new interest rates are implemented) or Bank Base Rate + 1%, whichever is lower.
This is known as the low interest cap, and this mechanism means that the interest rate on Plan 1 loans may change as a result, if the Bank Base Rate changes.
Applicable rate of RPI to student loans from Sep. 1, 2023 to Aug. 31 2024 is 13.5%.
However, due to Bank Base Rate + 1% being lower, the low interest cap is in place.
On Aug. 2, 2024, the Bank Base Rate changed to 5%, and this means, from Aug. 30, 2024 the interest rate for Plan 1 loans will decrease from 6.25% to 6%.
