To ask the Secretary of State for Education, if she will consider setting a lower interest rate for student loans.
19 July 2017
The student funding system is fair and progressive. It removes financial barriers for anyone hoping to study and is backed by the taxpayer, with outstanding debt written off after 30 years. Monthly student loan repayments are linked to income, not to interest rates or the amount borrowed. Borrowers earning less than the repayment threshold (£21,000) repay nothing at all.
Once borrowers leave study, those earning less than £21,000 are charged an interest rate of RPI only. Post-study interest rates are variable based on income, tapering up from RPI for those earning less than £21,000 to RPI+3% for borrowers earning £41,000 and above. The system of variable interest rates based on income makes the system more progressive, as higher earners contribute more to the sustainability of the higher education system.
We have a world class student finance system that is working well, and that has led to record numbers of disadvantaged students benefiting from higher education. As ever, we will keep the detailed features of the system under review to ensure it remains fair and effective.