In a bid to protect graduate borrowers from a rise in inflation the government will cap student loan interest rates.
The cap comes in response to student loan interest rates threatening to hit 12% in September because of a rise in the rate of RPI due to global economic pressures. To protect graduates against this, Government intervention will see a capping of interest rates at a maximum of 7.3%. The announcement was made in an effort to provide reassurance for student loan borrowers on Plan 2 (undergraduate) and Plan 3 (Postgraduate) loans ahead of the new academic year.
Student Loan Interest Rates Capped
Explaining why the government have taken steps to lower the interest rate on student loans down from an expected 12%, the Higher and Further Education Minister Michelle Donelan, said that she will always “strive for a fair deal for students”.
“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.”
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