Student Loan Interest Calculator
See how interest accumulates on your student loan over time and understand how it affects your total balance.
About Interest Calculation
Interest rates vary by loan plan and sometimes by income. This calculator shows how interest affects your total balance over time.
Interest Projection
Current Interest Rate
7.6%
RPI (4.6%) + 3%
Interest Added per Month
£285
Interest Added per Year
£3,420
Balance After 5 Years
£64,974
Assuming no repayments made
Total Interest Added
£19,974
Over the 5-year period
Interest growth visualization
Related Calculators
Understanding Student Loan Interest
Student loan interest can significantly impact the total amount you repay. Each loan plan has different rules for how interest is calculated and applied.
Interest Rates by Loan Plan
| Loan Plan | Interest Rate | Details |
|---|---|---|
| Plan 1 | Lower of RPI or Bank Rate +1% | Currently 4.6% |
| Plan 2 | RPI to RPI+3% based on income | 4.6% to 7.6% depending on income |
| Plan 4 | Lower of RPI or Bank Rate +1% | Currently 4.6% |
| Plan 5 | RPI only | Currently 4.6% |
| Postgraduate Loan | RPI+3% | Currently 7.6% |
How Interest Affects Your Total Repayment
For many borrowers, especially those on Plan 2, interest can cause their loan balance to grow significantly despite making regular repayments. If your monthly repayments are less than the interest accruing each month, your loan balance will increase over time.
However, it's important to remember that:
- Your repayments are based on your income, not your loan balance
- Any remaining loan balance is written off after the repayment period (25-40 years depending on your plan)
- Many borrowers will never repay their full loan plus interest before the write-off date
The Impact of Compound Interest
Student loans use compound interest, which means interest is calculated on both the original loan amount and any previously accumulated interest. This can cause your balance to grow exponentially if repayments don't cover the interest being added.
For example, a £45,000 Plan 2 loan accruing interest at 7.6% would accumulate approximately:
- £3,420 interest in the first year
- £3,680 interest in the second year (as the interest is now calculated on £48,420)
- Nearly £20,000 in interest over 5 years if no repayments were made
Frequently Asked Questions
Interest rates vary by loan plan. Plan 1 uses the lower of RPI or Bank Rate +1%. Plan 2 uses RPI to RPI+3% depending on income. Plan 4 uses the same method as Plan 1. Plan 5 uses RPI only. Postgraduate loans use RPI+3% regardless of income.
Yes, interest starts accumulating from the day the loan is paid into your account or to your university, not from when you start making repayments.
If you are not earning above the repayment threshold or if your repayments are lower than the interest being added, your loan balance will increase over time as interest accumulates.
Want to see if early repayment is worth it?
Calculate whether making voluntary overpayments on your student loan could save you money in the long run.
Try Our Overpayment Calculator