Students: Loans
The question
To ask the Secretary of State for Education, what estimate her Department has made of the proportion of borrowers on Plan 2 student loans whose outstanding balance is projected to increase for at least the first ten years of repayment due to interest accrual exceeding annual repayments.
Answered by Josh MacAlister
The department does not hold analysis of the proportion of borrowers whose loan is projected to increase in their first ten years of repayment.
Student loan repayments are linked to income, not to the amount borrowed or interest applied. As repayments remain income-contingent if a borrower’s salary remains the same, their monthly repayments will also stay the same. Repayments are made at a constant rate of 9% above the earnings threshold, and the 9% rate strikes a balance between affordability for graduates and fairness to taxpayers.
Outstanding debt, 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. This is a deliberate government investment in students and the economy.
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