University students will be burdened with even more debt
Rates are expected to be revised to 6.1 per cent of the total amount borrowed, an increase of about 33 per cent on the year before.
The staggering rise on borrowing costs, to cover tuition fees and living costs, has started because student loan interest rates are linked to a rise in inflation.
There has also been an increase in tuition fees to £9,250 for universities in England.
The government has been warned that students may not want to go to university because of the hike
Student loan interest rate set to rise by a third after UK inflation surge. Student debt is sky high as it is
Shadow Education Secretary Angela Rayner
Student face leaving university with up to £40,000 of debt, and more if they student in London, according to consumer spending watchdog Which?
The president of the National Union of Students, Malia Bouattia, said: “Graduates wanting to access the housing market, save and start pensions after university are already struggling to do so and this step will only disadvantage them further.”
For students who are still at university and graduates earning more than £41,000, interest on top of their loan is set at RPI plus three per cent, but those people earning £21,000 or less will have a 1.6 per cent interest rate.
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The Department for Education has claimed the loans are affordable and based on income
Jake Butler, of Save the Student money advice website (www.savethestudent.org), said: “Students need to remember that it’s highly unlikely they’ll pay off their full loan debt before it’s wiped 30 years after their graduations and no repayments need to be made until they earn over £21,000 per year after graduation.”
Mr Butler also claimed that the rise may put young people off from applying to university.
The Department for Education tried to soften the blow by insisting students will not have a higher monthly debt, but it will just take them longer to repay the debt.
Shadow Education Secretary Angela Rayner disagreed with the change saying: “Student loan interest rate set to rise by a third after UK inflation surge. Student debt is sky high as it is.”
A Department for Education spokeswoman said: “Our student funding system is sustainable and fair, with affordable loan rates based on income.
“This means no individual will see their repayments rise as a result of interest rates increasing. Rates are set each year in September and are not confirmed before then.”