Minister of State for Universities (): I am announcing today a temporary reduction in the
maximum student loan interest rate following the recent decline
in the prevailing market rate for comparable unsecured personal
loans.
In accordance with the Teaching and Higher Education Act 1998,
where the Government considers that the student loan interest
rate is higher than the prevailing market rate for comparable
unsecured loans, we will take steps to reduce the maximum student
loan interest rate.
The Government regularly monitors the interest rates set on
student loans against the interest rates prevailing on the market
for comparable loans.
Following a decline in the prevailing market rate, I have today,
9 September laid legislation to cap the maximum Post-2012 income
contingent repayment undergraduate and the postgraduate income
contingent repayment student loan interest rate in line with the
prevailing market rate. The cap will come into effect from 1
October 2021 and last for a period of three months.
The reduction will be 0.4 percentage point on the maximum student
loan interest rate to reflect the average market rates during the
preceding monitoring period.
The maximum Post-2012 undergraduate income contingent repayment
student loan interest rate and the postgraduate income contingent
repayment student loan interest rate will be 4.1% between 1
October and 31 December.
From 1 January 2022, the Post-2012 undergraduate and postgraduate
income contingent repayment student loan interest rates will
revert to the standard rate +3%.
Further caps may be put in place should the prevailing market
rate continue to be below student loan interest rates.
