We want the government to: 1. Lower the student loan repayment rate from 9% to 5%. 2. Reduce the maximum interest rate on Plan 2 loans from RPI+3% to CPI. 3. Raise the student loan repayment threshold annually in line with the highest of: CPI inflation, average earnings, or 2.5%.
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We think student loan repayments are unfair. Recent graduates face an extra 9% tax on any income over £28,470 (£25,000 on Plan 5), and will do for 30 years, often without clearing their debt. Interest rates as high as RPI+3% mean that, for many, balances grow faster than they can be repaid.
Meanwhile, in some sectors, real graduate pay is lower than 20 years ago, and in some areas rental costs are up 78%. Lowering the repayment rate could give graduates fairer, more manageable monthly payments and help them build financial stability.