Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the effect of changes to Government policy on interest rates on graduate debt on her Department's revenue budget for (a) 2018-19 and (b) 2019-20.

The Government has frozen tuition fees for academic year 2018-19 and raised both the repayment threshold and the thresholds at which variable interest rates apply to borrowers in repayment.

The repayment threshold will rise from £21,000 to £25,000 for the 2018-19 financial year. Following the threshold change, interest will be charged at RPI for those earning below £25,000 (compared to £21,000 before) and at RPI+3% for those earning above £45,000 (compared to £41,000 before), with interest applied on sliding scale for those earning between those two thresholds.

The impact of these policies on the department’s revenue budgets are to reduce the amount of interest charged to students and increase the amount of debt written off at the end of the loan term. We estimate the aggregate impact of these are a £50m reduction in financial year 2018-19 and a £125m reduction in financial year 2019-20. Budget cover will be through the department’s Annually Managed Expenditure budgets: this will be subject to Parliamentary approval in the normal way as part of the estimates process.