Interest Rates Capped at 6.3%
The interest rate on student loans in England is to be capped at 6.3% this autumn, the government says.
It had been due to rise from the current 4.5% to 7.3% but is being altered to “align with the most recent data on market rates” for loans.
Universities minister Andrea Jenkyns said she wanted to “provide support” amid the rising cost of living.
But the Institute for Fiscal Studies said the change did “nothing at all to protect current students”.
Student loan interest rates will be reviewed again in December.
The interest rate on loans for those currently at university in England is now 6.1%. The new cap will apply from September.
Ms Jenkyns said “difficult decisions” had to be made to invest in the future of young people.
“We have always been clear that we want to support students with the cost of living, which is why we are aligning the interest rate on student loans with market rates,” she said.
But IFS director Paul Johnson said it was a “missed opportunity”.
He added: “Rising interest rates and inflation mean that anyone taking out a loan this autumn will be worse off than they otherwise would have been.”
The government said it would also increase the amount of money available for maintenance grants and loans by £286m in 2018-19.
But Labour’s Shadow Education Secretary Angela Rayner said the changes did not go far enough.
“The reality is that after eight years of Tory austerity, students are set to graduate with record levels of debt,” she said.
“This partial U-turn does not go nearly far enough to address the crisis in our higher education system.”
Liberal Democrat education spokesperson John Pugh agreed: “This is too little too late from a government that has presided over an increase in student debt of over £16bn since 2010.”
The National Union of Students (NUS) said the changes were “welcome” but that they did not address the “root cause” of the problem.
NUS president Malia Bouattia said: “The government is still refusing to rule out future hikes, and this will only add to the pressure and anxiety that students already feel.”
Sorana Vieru, NUS vice-president for higher education, said: “It does nothing to alleviate the cost-of-living crisis or deal with decades of underfunding in our higher education system.”
What do you think of the changes? Are they enough to help you with the cost of living? Let us know in the comments below.
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