Question to the Department for Education:

To ask the Secretary of State for Education, whether he has made an assessment of the potential merits of introducing an option of a repayment holiday for student loans as part of his package of cost of living support for people on low incomes.

The student loan repayment system incorporates a number of protections for those making loan repayments, including for those on low incomes.

Repayments are calculated as a fixed percentage of earnings above the relevant repayment threshold. This is currently £27,295 for a post-2012 undergraduate loan and £21,000 for a postgraduate loan. These do not change as a result of the interest rate charged, or the amount borrowed. If a borrower’s income decreases, so does the amount they repay. If income is below the relevant repayment threshold, or a borrower is not earning, they do not have to make repayments. 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.