UK Caps Student Loan Interest at 6% in Major Policy Shift

The UK government will cap interest rates on student loans at 6%, officials announced. The limit applies immediately. This change affects millions of graduates. It covers all "Plan 2" loans for undergraduates and "Plan 3" loans for postgraduates. These loans previously had variable rates tied to inflation, which recently exceeded 7%. The 6% cap is a significant reduction. It will lower monthly payments for current borrowers during periods of high inflation. The government stated the move aims to provide certainty and fairness. Student loan interest has been highly controversial. Critics argued soaring rates increased graduate debt without government revenue benefit. The new policy addresses these widespread concerns. Officials confirmed the cap is a permanent feature of the loan system. Future rate changes will not exceed this 6% ceiling.