Student loan interest rates frozen

Student Loans

The Government has announced that student loan interest rates will remain at 7.3% from September 2022.


Student loan interest rates normally increase in line with inflation. In this case, the current 9% would have seen student loan rates rise to 12% while the base rate is only 1.25%.



A rise in the rate of RPI due to global economic pressures meant student loan borrowers faced an increase in September. To prevent this, the Government has capped student loan interest rates at a maximum of 7.3% to protect graduates.


Confirmation on student loan interest rates is usually made in August. The Government have brought this decision forward, based on predicted rates, to provide reassurance for student loan borrowers on Plan 2 (undergraduate) and Plan 3 (postgraduate) loans.


Monthly student loan repayments are calculated by income rather than interest rates or the amount borrowed. Unlike for commercials loans, repayments will stop for any borrowers who earn below the relevant repayment threshold.


Workers repay 9% of their income over the repayment threshold, which is currently £27,295 a year, £2,274 a month or £524 a week in the UK.


Income each year before tax

Monthly income before tax

Approximate monthly repayment

















For future borrowers, student finance will be put on a more sustainable footing. As announced in February, interest rates will be reduced so from 2023/24, new graduates will not, in real terms, repay more than they borrow.


HMRC collects student loan repayments from employers through the tax system. Self-employed workers settle loan payments through self assessment tax returns.