Loan interest

Interest rates on student loans will be capped at 7.3%

NUS says cap doesn’t go far enough and interest rates are ‘severely high’

Interest rates on student loan repayments will be capped at 7.3%, saving graduates hundreds of pounds.

Last month, it was revealed that by September 2022, interest rates on student loans would rise from 4.5% to 12% due to rising inflation. Now, thanks to the cap, this is no longer the case.

But the National Union of Students (NUS) is not happy with the cap, describing the new interest rates as “crucially high”.

Universities minister Michelle Donelan said: ‘The government has always been clear that where it can help drive up prices we will, and I will always strive for a fair deal to students, which is why we have reduced the interest rate on student loans from the expected 12%.

“I want to reassure that this does not change the monthly repayment amount for borrowers, and we have brought this announcement forward to provide more clarity and peace of mind for graduates at this time.

“For those starting graduate school 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 pay back more than what he borrowed in real terms.”

Commenting on the Department for Education’s decision to cap interest rates on student loans, NUS UK chair Larissa Kennedy said: “Although some graduates may breathe a sigh of relief that the interest rate is no longer in double digits, ministers should prioritize the urgent provision of living support costs here and now.

“We hear from students who can’t even afford to keep taking the bus to therapy sessions. The government should introduce rent protections, offer basic levels of maintenance support and announce a cost of living payment for all students.

“Students are not cash cows, and we cannot continue to bear the brunt of the government’s regressive agenda which is putting millions of people at risk.”

Featured image: Shutterstock. Kevin Hodgson Photography

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