The government announced that student loan interest rates will be cut again in England and Wales due to rising inflation.
This consolidates the previous reduction announced in June that the student loan interest rates were to be reduced from 12% to 7.3%.
Increasingly Skills Minister Andrea Jenkyns said the new cap was being introduced “to align with the most recent market rate data”.
A spokesperson for the student loan company said borrowers need not do anything in light of the change, as it will be applied automatically.
The change applies to undergraduate (plan 2) and postgraduate (plan 3) loans.
The new rates will reduce student loan interest rates by the highest amount on record, the DfE said.
someone with a student loan a balance of £45,000 would reduce their accrued interest by around £210 per month at newly announced rates compared to interest rates of 12%, the department added.
This reduction is on the total value of a loanbecause the monthly repayments do not change.
Ms Jenkyns said: ‘We understand that many people are concerned about the impact of rising prices and we want to reassure people that we are stepping in to provide support where we can.
“In June, we used forecasted market rates to announce the announcement of a cap on student loan interest rates have fallen from the expected 12% and we are now reducing the interest rate on student loans to 6.3%, the rate in effect today, to align with the most recent data on market rates.
“For those starting higher education in September 2023, and all students considering this next step at the moment, we have reduced future interest rates so that no new graduate will ever have to repay more than what he borrowed in real terms.”
ASstudent loans corporation spokesperson said: “The change in interest rates is automatically applied so customers do not have to take any action.
“We encourage customers to use SLC’s online repayment service to regularly check their loan balance and repayment information, as well as to ensure their contact details are up to date.”