Question to the Department for Education:

To ask the Secretary of State for Education, what recent assessment his Department has made of the potential impact of inflation on student loan repayments.

The student loan repayment system incorporates a number of protections for those making loan repayments. Repayments are calculated as a fixed percentage of earnings above the relevant repayment threshold, currently £27,295 for a post 2012 undergraduate plan and £21,000 for a post graduate loan. These do not change as a result of the interest rate charged or the amount borrowed. If a borrower’s income drops, so does the amount they repay. If income is below the relevant repayment threshold, or a borrower is not earning, then they do not have to make repayments at all. Any outstanding debt, including interest accrued, is written off after the loan term ends, or in case of death or disability, at no detriment to the borrower. There are no commercial loans that offer this level of protection.

To further protect borrowers, the government, by law, must cap maximum student loan rates to ensure the interest rate charged on the loan is in line with market rates for comparable unsecured personal loans. The government monitors student loan rates against the Bank of England’s data series for the effective interest rates on new and existing unsecured personal loans.

The government recognises the additional cost of living pressures that have arisen this year. We have taken action to support people with the cost of living, including through the Energy Bill Relief Scheme, which provides a price reduction over the winter period. This is alongside the Energy Price Guarantee which is saving the average household over £900.