The British government has announced that interest on some student loans in England will be capped at 6% in the 2026-2027 academic year. The measure targets all graduates with Plan 2 and Plan 3 loans, including the thousands of Romanians who studied at British universities in the last decade.
The announcement was made by Baroness Jacqui Smith and was presented as a hedge against rising inflation caused by the Iran war. According to the BBC, the cap is applied automatically, without beneficiaries having to apply.
To whom does the cap apply?
The measure covers two types of loans. The first is Plan 2, awarded in England between September 2012 and July 2023, still available in Wales. The second is Plan 3, which is graduate school loans.
Currently, interest on Plan 2 is calculated using the formula: consumer price index RPI plus up to 3 per cent, depending on income. Those who earn more pay higher interest. The RPI used for the current academic year was 3.2%, meaning that the debt of high-income graduates rose by 6.2% this year.
RPI for March 2026 has not yet been published, but in February the index was 3.6%. Analysts quoted by the BBC expect further growth due to tensions in the Middle East.
Why it matters for Romanians in the UK
According to the data published by the Higher Education Statistics Agency (HESA), the official British agency for university statistics, in the 2019-2020 academic year, 10,830 Romanian students were enrolled at UK universities, which placed Romania in fifth place in the EU after Italy, France, Germany and Spain.
A year later, in 2020-2021, Romania climbed to second place among EU countries for universities in England, overtaking France. Most of these students benefited at the time from the “home fees” regime and had access to Plan 2 loans, on the terms offered to British citizens. This access ceased for those who started their studies from August 2021, when the UK changed the rules for EU citizens after Brexit.
This means that, in practice, thousands of Romanians who studied in England between 2012 and 2021 currently have an active Plan 2 loan. For them, capping interest at 6% means that the debt will not grow faster next year than that, no matter how much inflation rises.
What doesn’t change
The cap is temporary and covers the 2026-2027 academic year only. The monthly payment of the loan remains unchanged, as it still depends on the annual gross income and only starts after the salary exceeds the threshold established by law. The cap affects how quickly the total debt grows, not how much the graduate pays each month.
Reactions and criticism
Amira Campbell, president of the UK National Union of Students, called the decision a major victory, but called on the government to go further and reverse the freeze on the repayment threshold announced in November’s budget.
Tom Allingham, from the Save the Student group, said he was pleased the government had acted ahead of a possible RPI rise, but stressed wider changes were needed for a truly fair system. On the same note, Oliver Gardner, founder of Rethink Repayment, warned that the measure is temporary and does not solve the underlying problem.
On the other side, Laura Trott, education minister in the Tory shadow cabinet, accused the government of making only small adjustments while graduates continue to pay interest rates above the rate of inflation.
What’s next
Britain’s parliament launched an inquiry into the student loan system in March after growing complaints about repayment terms. For Romanians in the UK who have a Plan 2 or Plan 3 student loan, the next important milestone is the publication of the RPI, which will show how much the interest would have increased without the ceiling.
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