England student loan interest rate capped at 7.3%

The interest rate on student loans in England is to rise by less than originally predicted this autumn.

The rate on repayments had been predicted to rise from the current 4.5% to 12% by the Institute for Fiscal Studies, but the government says it will now be capped at 7.3%.

Higher Education Minister Michelle Donelan said the level of the cap would provide “peace of mind for graduates”.

But the National Union of Students said the cap was “still cruelly high”.

The IFS welcomed the announcement but said it would “have little or no effect” on most graduates’ repayments.

The interest rate on the loan for those currently at university in England is calculated by adding 3% to the retail price index (RPI) measure of inflation.

The RPI figure confirmed in April set the interest rate for the coming academic year – and the IFS said the maximum rate on student loans would jump from 4.5% this year to 12% from September 2022.

Source – BBC News