Question to the Department for Education:

To ask the Secretary of State for Education, what estimate she has made of the value of interest repayments on Plan 2 student loans net of (a) the Government’s cost of financing student loan outlay, (b) expected write-offs and (c) administrative costs.

Repayments made against accrued interest are not separated from repayments made against the borrowed portion of the loan.

The department publishes an estimate of the subsidy portion of student loan outlay in the form of the Resource Accounting and Budgeting (RAB) charge. The RAB charge for Plan 2 outlay in England in 2024/25 was 32%.

The RAB charge is calculated as the present value of student loan outlay less expected future repayments, discounted by inflation plus the financial instrument discount rate. Expectations of interest, write offs and the government’s borrowing costs are factored into the fair value of student loans on issuance. In valuing the loan book at financial year end, estimated operational costs of servicing student loans are accounted for, in accordance with International Financial Reporting Standards. Higher interest relative to inflation reduces the forecasted cost of the loan system due to increased future repayments.