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Government confirms 6.1% top interest rate on student loans

Government confirms 6.1% top interest rate on student loans
2 min read

The top rate of interest on student loans will be 6.1% from this autumn, after the Government confirmed it would not revisit the policy. 

Ministers have been under pressure to take action on the soaring levels of graduate debt, as tuition fees rise above £9,000 for the first time and grants for poorer students are replaced by loans.

One idea floated was to cut the interest paid on the debt pile, but the Department for Education yesterday ruled out a rethink.

The top level of interest, set at the rate of RPI in March +3%, is charged on all loans while students are still studying, and on graduates earning above £40,000.

Lower-paid graduates have a lower rate of interest, while those earning less than £21,000 make no repayments at all.

A Department for Education spokeswoman said: “As has always been the case, borrowers will only ever pay back what they can afford so no-one will see monthly repayments rise and only the highest earners will pay the top rate of interest.”

Labour has been pressing the Government on the cost of higher education after its election pledge to abolish tuition fees.

Angela Rayner, the Shadow Education Secretary, said the Government was “sneaking through” the hike in interest rates without proper parliamentary scrutiny.

“Graduate debt is already skyrocketing, and too many students fear a lifetime of debt,” she added.

The announcement comes ahead of the publication of this year’s A-level results tomorrow.

Gordon Marsden, Labour’s higher education spokesman, said the hike in tuition fees under the Coalition had been “socially and economically destructive” and accused his government counterpart Jo Johnson of being “in denial” about its impact.

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