Welsh Ministers have given in-principle backing to a proposal that would cap student loan interest rates at 6% for borrowers in Wales from September 2026.
The move follows a proposal by the UK Government to introduce the cap on Plan 2 and Plan 3 student loans for the 2026/27 academic year. The Welsh Government has now indicated its support, although a final decision has yet to be made.
Any formal introduction of the cap in Wales will be a matter for the next Welsh Government and will require approval from the Senedd.
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 proposed cap is separate from recent discussions around student loan repayment thresholds. The First Minister has already confirmed in the Senedd that the freeze on Plan 2 repayment thresholds does not apply to Welsh borrowers.
While Welsh Ministers have signalled their support, only they have the authority to set student loan interest rates in Wales. The final decision on whether to implement the cap will therefore rest with the next administration after the upcoming Senedd election.
If approved, the policy is expected to provide additional financial protection for student loan borrowers across Wales by limiting the level of interest applied to their loans.
