Students: Loans
The question
To ask the Secretary of State for Education, whether she plans to make an assessment of the potential impact of student loan repayments on those with multiple plans and postgraduate loans.
Answered by Josh MacAlister
Unlike commercial loans, student loans carry significant protections for borrowers. Student loan repayments are linked to income, not to the amount borrowed or interest applied. Repayments are made at a constant rate of 9% above the earnings threshold for undergraduate loans (borrowers with multiple undergraduate loans have their contributions apportioned to the relevant loans), and 6% above the earnings threshold for postgraduate loans.
Postgraduate loans are made concurrently with any outstanding undergraduate loan. If a borrower’s income drops below the repayment threshold, or they are not earning, their repayments will stop.
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.
The government appreciates that making student loan repayments does have an impact on individuals. This is why there are unique protections for borrowers, and the finance system is heavily subsidised by taxpayers.
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