Borrowers in Wales could see their student loan interest rates capped under proposals backed in principle by the Welsh Government.
The move would limit interest on Plan 2 and Plan 3 student loans to a maximum of 6%, taking effect from September 2026 for the 2026/27 academic year. It follows a proposal put forward by the UK Government, which Welsh Ministers have now indicated their support for.
However, no final commitment has been made. Any formal decision – including the necessary Regulations – will fall to the next Welsh Government after the Senedd election and will require Senedd approval. Only Welsh Ministers have the power to set student loan interest rates in Wales.
Vikki Howells, Minister for Further and Higher Education, said: “I am pleased to support the proposed cap on student loan interest rates because of the protection it will offer for student loan borrowers in Wales. A final decision on applying the interest rate cap for Welsh borrowers will need to be taken by the next Welsh Government, following the Senedd election.”
The Welsh Government has also stressed that this proposal is entirely separate from the recent Plan 2 repayment threshold freeze. The First Minister has confirmed in the Senedd that the threshold freeze does not apply to Welsh borrowers.
