How interest is calculated - Plan 5
Find out how interest is calculated and applied if you have a Plan 5 student loan.
Applies to England
When interest is applied
You’re charged interest from the day we make your first payment to you or to your university or college until your loan has been repaid in full or cancelled. Interest is added to your balance each month.
Annual interest rate changes
The interest rate is usually set on 1 September each year, based on the Retail Price Index of the previous March. The interest rate charged is normally the Retail Price Index.
However, during some periods we may apply an interest cap to ensure you’re not being charged a higher interest rate than comparable rates found in the commercial market.
What is the Retail Price Index?
It’s a measure of inflation, which measures changes to the cost of living in the UK.
What is the interest rate cap?
The Department for Education monitors comparable market rates using monthly data published by the Bank of England.
If the average comparable market rate is lower than the interest rate you’re being charged on your Plan 5 loan, we’ll apply a temporary interest rate cap, so you’re not disadvantaged. The comparable market rate is reviewed monthly and a change to the interest rate cap made if necessary.
The interest rate cap is not currently being applied.
Previous interest rates
The rates in the table apply to Plan 5 only.
| Date | Interest rate |
|---|---|
| 1 August 2024 to 31 August 2024 | 8% |
| 1 June 2024 to 31 July 2024 | 7.9% |
| 1 April 2024 to 31 May 2024 | 7.8% |
| 1 March 2024 to 31 March 2024 | 7.7% |
| 1 January 2024 to 29 February 2024 | 7.6% |
| 1 December 2023 to 31 December 2023 | 7.5% |
| 1 September 2023 to 30 November 2023 | 7.3% |
| 1 August 2023 to 31 August 2023 | 7.1% |
Updates to this page
Published 25 July 2023Last updated 16 September 2024 + show all updates
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Updated guidance on the interest rate cap.
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Plan 5 loan repayment interest rate increase to 8%.
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Previous interest rates table has been updated
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Current interest rate and previous interest rates table have been updated
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Previous interest rates table has been updated.
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Interest rate information has been updated
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The current interest rate cap and previous interest rates table have been updated
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A previous interest rates table has been added
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First published.