Student loan inflation rates to be capped as inflation soars - what it means for your repayments
manchestereveningnews.co.ukStudent loan interest rates will be capped at 7.3 per cent for a year as inflation soars, the government has announced. Borrowers had feared facing a 12 per cent interest rate in September due to a rise in Retail Price Index (RPI) inflation.
However, the government has decided to intervene ahead of the point that interest rates on student loans are usually confirmed for the coming year, in August, to “provide greater clarity and peace of mind for graduates at this time”.
The interest rates cap, which affects those on Plan 2 (undergraduate) and Plan 3 (postgraduate) loans, will come into effect from September 2022.
The Department for Education described the move as “the largest scale reduction of student loan interest rates on record”. READ MORE: Government blasted as it's set to REJECT salt and sugar tax plans Michelle Donelan, the higher and further education minister, said: “The government has always been clear that where it can help with rising prices we will, and I will always strive for a fair deal for students, which is why we have reduced the interest rate on student loans down from an expected 12 per cent." She added: “For those starting higher education in September 2023 and any students considering that next step at the moment, we have cut future interest rates so that no new graduate will ever again have to pay back more than they have borrowed in real terms.” The cap will not affect monthly repayments, which are based on income.
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