The UK Department for Education announced it will cap interest rates on Plan 2 and postgraduate student loans at 6 percent, as concerns grow over rising inflation and its impact on borrowers.

The cap applies to Plan 2 loans, which cover undergraduate students who began their studies from September 2012, as well as postgraduate loans. The measure comes as policymakers across Europe express concern about inflation expectations and their potential economic impact.

The 6 percent rate represents approximately double the current UK inflation rate, according to government data. Student loan interest rates had previously been subject to variable calculations that could result in higher charges for borrowers.

The announcement reflects broader concerns about the cost of living and debt burdens facing consumers. Financial experts note that rising costs across sectors, including education financing, are affecting long-term financial planning for individuals.

The policy change addresses mounting criticism over student debt costs, though the cap still maintains rates significantly above current inflation levels. The Department for Education has not specified whether the cap will be permanent or subject to future review.

Inflation concerns have prompted various policy responses across different sectors, with central bank officials warning that inflation expectations could become entrenched if not properly managed.