Student loan interest rates capped at 7.3 per cent, saving graduates hundreds of pounds

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

Last month it was revealed that by September 2022, student loan interest rates would l leap from 4.5 per cent to 12 per cent due to rising inflation. Now, thanks to the cap, this is no longer the case.

But the National Union of Students (NUS) is unsatisfied with the cap, describing the new interest rate figures are “cruelly high.”

Universities minister Michelle Donelan 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.

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

“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.”

Commenting on the Department for Education’s decision to cap student loan interest rates, NUS UK President Larissa Kennedy said: “While some graduates might breathe a sigh of relief that the interest rate is no longer in double figures, Ministers should be prioritising providing urgent cost of living support here and now.

“We’re hearing from students who can’t even afford to continue getting 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 aren’t cash cows, and we can’t keep taking the brunt of the Government’s regressive agenda that is leaving millions exposed to hardship.”

Featured image: Shutterstock . Kevin Hodgson Photography

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