Gareth Snell MP backs Labour cap on student loan interest rates

Gareth Snell MP backs Labour cap on student loan interest rates

Under the Conservatives, the Student Loan system in this country was broken. There broken system led to ever increasing payments but with no prospect of clearing the original loan debt. After listening to students, graduates and experts, the Labour government has capped interest on Plan 2 and Plan 3 student loans at 6% from 1 September 2026. This will protect graduates in Stoke-on-Trent Central from higher monthly payments at a time when the war in Iran is heaping more pressure on the cost of living.

Gareth Snell MP has welcomed the measure, which removes the risk of loan balances skyrocketting due to global instability. Under the previous system adopted by the Conservatives, Plan 2 student loan borrowers paid interest of between RPI and RPI+3% depending on earnings, leaving them exposed to short-term inflation shocks beyond the government’s control.

The cap forms part of a wider package of reforms to the student finance system designed to fix the mess inherited from the Conservatives. The repayment threshold for Plan 2 loans has been raised twice since April 2025 — first to £28,470, and then to £29,385 — benefiting an estimated 125,000 students.

Gareth Snell MP said: ” This Labour government is taking action to protect students and graduates in Stoke‑on‑Trent Central. We are ensuring that student finance payments are not another blow for hardworking people and doing what we can to protect people from the affects of  war beyond our control.”

Minister for Skills Jacqui Smith said: “Capping the maximum interest rate on Plan 2 and Plan 3 student loans will provide immediate protection for borrowers, supporting those most exposed within this already unfair system.”