Labour blasts ‘eye-watering’ student debt as analysis reveals interest to double in five years
Labour has condemned “eye-watering” levels of student loan debt as analysis found that the total interest chalked up by graduates will almost double in five years.
The party found that the total amount owed on top on graduates’ student loan debt is forecast to soar from £4.4bn in 2018-19 to more than £8.5bn in 2024.
The interest rate charged on loans for undergraduates who began their studies after September 2012 is currently 6.3% - the Retail Price Index (RPI) plus 3%.
Department for Education figures on student loan repayments show that almost all of the rise will come from the post-2012 undergraduate loans, with the total interest added to these debts set to leap from £3.5bn to £7.6bn.
Students in England currently pay up to £9,250 per year in fees, however ministers are considering the findings of a review launched by Theresa May which recommended that the maximum is cut to £7,500 per year.
Shadow Education Secretary Angela Rayner said: “A combination of sky-high tuition fees and soaring interest rates is pricing young people out of education and creating eye-watering debts for those who do go to university.
“Under the Tories and their broken student loan system, thousands of students are being burdened with vast levels of debt that they will never be able to repay.
“With almost half the cost of the current broken system being picked up by the taxpayer, the government should stop cooking the books and start being honest with the public about how we fund higher education.
“Labour will scrap tuition fees and restore maintenance grants for disadvantaged students so that access to education is a right for all, and everyone can reach their potential, regardless of their background.”
But Universities Minister Jo Johnson said: “Student loans support students to reap the benefits of attending our world-leading universities.
“Taxpayers contribute around half the overall cost of higher education - a conscious investment in the skills and people of this country.
“It is right that those who benefit directly from university education fund the other half of the cost and contribute on the basis of their income above £25,725 a year.
He added: "Jeremy Corbyn’s Labour Party cannot be trusted on fees. He promises students and graduates one thing - then says another.
"Jeremy Corbyn’s Labour policy would leave taxpayers who didn’t attend university paying for those who do - on the hook for tens of billions of pounds of unfunded commitments.
“You can’t trust Labour when it comes to university fees, university funding or taxpayers money.”