Friday, September 24

Student loan interest rates to drop for many next month and repayment thresholds to rise for some from April – what you need to know

The Department for Education (DfE) published the new interest rates this week, setting out what students will be charged from 1 September. The rates are based in part on the Retail Prices Index (RPI) measure of inflation for March, which was published in April. (MSE) had predicted the rate drops at the time – most of which have now been officially confirmed.

In addition, it’s been confirmed that the repayment threshold for some borrowers will increase from April 2022. This means people with certain types of student loans will be able to earn more before they have to start repaying.

But while lower interest rates will come as good news to many, MSE founder Martin Lewis has always warned student loan borrowers to take interest rates with a pinch of salt, as for most people the amount of interest they’re charged won’t affect how much they repay, as you only pay back 9% of what you earn above the threshold (6% for postgrad loans), and for most all remaining debt is wiped after 30 years.

See our Student Loans Mythbusting guide for more key student finance need-to-knows.