Student loan interest rates set to drop in September – what you need to know


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Changes to student funding have been postponed

In 2018, the government launched a broad review of student funding, supported by an independent external chair, Dr Philip Augar, and a panel. The panel’s findings were published in a report in May 2019.

Prior to the review, there were calls for the government to abandon the use of RPI to calculate interest rates in favor of the Consumer Price Index (CPI) – the CPI is generally lower than the RPI .

But while the report noted “widespread concerns” about the quality of the RPI measure, it did not make a specific recommendation on its replacement, saying it was “a matter of the Treasury.” However, he made a series of other recommendations on how interest should be charged, including capping the RPI figure for current students (instead of RPI + 3% as it is now).

In its provisional conclusion to the review, released in January 2021, the government did not mention student loan interest rates, leaving a full conclusion at a later date – it’s unclear when that will take place, as the he full expenditure review to which it relates has not yet been scheduled. At the time, the government blamed its lack of response on its need to focus on the pandemic.

What is the government saying?

A spokesperson for the Department of Education said: “The student funding system is designed to remove financial barriers for those wishing to study, and repayments are based on income, not interest or amount. borrowed.

“Student loan interest rates are set annually and SLC, on behalf of the government, will announce them in August 2021.

“The majority of borrowers will not repay their loans in full and will have this part of their loan written off without prejudice to the borrower.”

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