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Government Confirms It Will Hike Interest Rates on Student Loans

Posted by Richard Ward in , ,

Image courtesy of Flickr, Creative Commons

The government has reinforced its stance on charging interest rates on student loans in England of 6.1% from autumn this year.

There had been reports the government might rethink its plans to charge such high interest rates due to fears of excessive debt levels.

However, this week the Department for Education and the Student Loans Company confirmed the proposed increase.

The announcement rules out speculation the government was considering limiting interest rate increases for student loans on tuition fees and maintenance costs from September 2017 to August 2018.

Students are due to receive their A-level results this week, and those starting university this year will be subject to the 6.1% interest rate charge on student loans.

A recent study by the Institute for Fiscal Studies calculated that students will have accumulated on average, £5,800 in interest rate charges before they have even graduated.

However, it's not just new students being hit. The increase will also apply to other former students who received loans after fees were increased to £9,000 in 2012.

University Minister Jo Johnson has previously argued the fee system represented a fair distribution of costs between students and taxpayers and that it provides financial sustainability for universities.