Students: Loans
The question
To ask the Secretary of State for Education, whether she has made an assessment with Cabinet colleagues of the potential impact of interest rates on student loans on graduates’ likelihood of becoming home owners.
Answered by Josh MacAlister
Interest rates do not impact monthly repayments made by student loan borrowers as repayments are linked to income, not to the amount borrowed or interest applied. If a borrower is earning above the repayment threshold, repayments are made at a constant rate of 9%. This rate strikes a balance between affordability for graduates and fairness to taxpayers. For example, someone earning £30,000 will repay around £4 per month in the 2026/27 financial year under the repayment threshold of £29,385.
Those earning below the earnings threshold do not make repayments. Any outstanding loan including interest built up, is cancelled at the end of the loan term with no detriment to the borrower, and debt is never passed on to family members or descendants.
Having an outstanding student loan is not a barrier to accessing a mortgage, however regular student loan repayments will be considered alongside other living costs as part of the affordability check for mortgage applications.
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