Pre-2012 income contingent (ICR) student loans have an interest rate of either RPI (from the March prior to the September when the new interest rates are implemented) or the Bank Base Rate + 1%, whichever is the lower (this is known as the "low interest cap"). The low interest cap mechanism means that the interest rate on Plan 1 loans can change in-year, if the Bank Base Rate changes.
Currently the maximum interest rate for pre-2012 income contingent (ICR) student loans is 9% (RPI). However, as the Bank Base Rate + 1% is lower than this, the low interest cap is in place.
On 22 September 2022, the Bank Base Rate changed to 2.25%. In line with this, from 20 October 2022 the interest rate for pre-2012 ICR loans will increase to 3.25%.
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