Students: Loans
The question
To ask the Secretary of State for Education, what assessment her Department has made of the potential impact of interest rates applied to income-contingent student loans on the total level of graduate debt.
Answered by Josh MacAlister
The department does not hold analysis on the impact of interest rates on total level of graduate debt.
No Plan 5 borrower should see their loan balance grow in real terms without additional outlay, as the rate of interest for Plan 5 loans is applied at Retail Price Index (RPI) only.
Plan 2 loan interest rates are applied at RPI only, then variable up to RPI+3% depending on earnings. Interest rates do not impact monthly repayments made by student loan borrowers, which stay at a constant rate of 9% above an earnings threshold to protect lower earners.
Outstanding debt, including interest accrued, 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. There are no commercial loans that offer this level of borrower protection. This is a deliberate government investment in students and the economy.
Verbatim has judged this answer against the question that was actually asked — answered, partly answered, or evaded. Sign in to see the verdict →