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 thecomparable averagerates 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 interestcomparable market rates set by commercial banks using monthly data providedpublished by the Bank of England.

If the average commercialcomparable interestmarket rate is lower than the interest rate you’re being charged on your Plan 52 loan, we’ll apply a temporary interest rate cap, so you’re not disadvantaged. The interestcomparable market rate willis be reviewed monthly and changeda change to the interest rate cap made if necessary.

The current interest rate cap is capped at 7.8%.7.9%.

Previous interest rates

The rates in the table apply to Plan 5 only.

Date Interest rate
1 April 2024 to 31 May 20247.8%
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%
Published 25 July 2023
Last updated 110 AprilJuly 2024 + show all updates
  1. Previous interest rates table has been updated

  2. Current interest rate and previous interest rates table have been updated

  3. Previous interest rates table has been updated.

  4. Interest rate information has been updated

  5. The current interest rate cap and previous interest rates table have been updated

  6. A previous interest rates table has been added

  7. First published.