UK government announces 6% cap on interest rate for student loans

The UK government has announced it will cap interest rates on student loans at 6% from September. The move is designed to protect students from huge debt burdens as interest rates are based on inflation which is increasing because of the conflict in the Middle East.

Jacqui Smith, the UK skills minister for education, was quoted in UK media on 7/04/2026 announcing the cap and saying: “Capping the maximum interest rate on plan 2 and plan 3 student loans will provide immediate protection for borrowers, supporting those who are most exposed within this already unfair system. We’re acting now to defend against the consequences of faraway conflicts in an uncertain world.”

UK students have been facing an unprecedented debt crisis as high interest rates have left thousands owing more than they originally borrowed because repayments are only enough to cover interest charges.

The UK National Union of Students (NUS) has been calling on the government to cap interest rates and allow the income threshold at which students have to start making repayments on their loans rise in line with…