Students: Loans
The question
To ask the Secretary of State for Education, what assessment her Department has made of the potential impact of the RPI plus 3 per cent interest rate on Plan 2 student loan debt on the ability of graduates earning the UK median wage to begin to pay down their outstanding student loan debt.
Answered by Josh MacAlister
Plan 2 interest rates vary with income when the borrower has left study and is in repayment. The lower interest threshold, below which borrowers are charged an interest rate of RPI+0%, is currently £28,470. Interest then increases on a sliding scale to RPI+3% for borrowers earning over the higher interest threshold (currently £51,245). This ensures that, post-study, only borrowers earning higher incomes are charged RPI+3 interest.
Student loan repayments are made based on a borrower’s monthly or weekly earnings, not the interest rate or amount borrowed. Outstanding debt, including interest accrued, is cancelled at the end of the loan term with no detriment to the borrower.
Verbatim has judged this answer against the question that was actually asked — answered, partly answered, or evaded. Sign in to see the verdict →