Student Loan Interest Rates

Lord Porter of Spalding Excerpts

Wednesday 27th March 2024 Lords Chamber

[Baroness Barran (Con)]

I think the noble Lord knows the answer to his question: it is not appropriate to compare mortgages with student debt, which is unsecured and expires and does not have to be repaid in full. The noble Lord shakes his head, but he can do the maths: a mortgage is asset-backed, and one has to repay it; a student loan is not asset-backed and expires. As the noble Lord knows, under the current system, the vast majority of students do not repay it in full.

[Lord Porter of Spalding (Con)]

My Lords, I declare that I have a number of children and grandchildren who are suffering from the ridiculous regime of charging students interest at a stupid rate, when the Government could have controlled that debt book. Does my noble friend not agree that it would be far better for the youth of our country and the future of our own Government if we put that debt book back on to a public works loan board or something equivalent? The level of intergenerational unfairness in this country is outrageous, and we are fuelling it. It is ridiculous.

[Baroness Barran (Con)]

I am afraid I cannot agree with my noble friend. The debt repayment levels are dependent on income, and, as I said to the noble Lord, Lord Sikka, we expect that under the new plan 5 loans 61% of new full-time borrowers will repay their loans in full, with the balance being subsidised by the taxpayer. A recent graduate on a starting salary of £26,000 will repay £7 a month.