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The Russel Group Urges for a Reassessment on Student Loan Interest Rates

Posted by Richard Ward in , ,

Image courtesy of Flickr, Creative Commons

The Russell Group, which represents the UK's most prestigious universities, has urged the Government to reassess the interest rate it is charging on student loans.

Commenting via a blog, Dr Tim Bradshaw, Acting Director of the Russell Group, described the rate of 6.1% charged on loans coming into force this September as "out of touch with commercial lending rates, and very high compared with the rates at which Government can borrow."

Dr Tim Bradshaw outlined a series of measures for making the system fairer.

Alongside reassessing the interest rate of 6.1% charged on student loans from this September, it was suggested the £21,000 repayment threshold could also be reconsidered. Dr Bradshaw argued raising the repayment threshold in line with inflation would particularly benefit those students on low and middle incomes.

Another suggestion was to look at making repayments on outstanding loans through salary sacrifice arrangements, which would reduce the tax bill for individuals and allow new graduates to keep more of their earnings early on in their careers.

In response to the comments made by Dr Bradshaw, the universities minister Jo Johnson, defended the current system, arguing it has allowed more people from disadvantaged backgrounds to go to university than ever before.

Dr Bradshaw recognised the current system had allowed more students than ever before to study at university and in particular it has encouraged students from disadvantaged backgrounds, but argued his proposed measures could make it fairer for students without undermining the sustainability balance.