Question to the Department for Education:

To ask the Secretary of State for Education, for what reasons her Department applies different interest rates to different student loan repayment plans.

Decisions on Plan 2 and Plan 5 conditions were made by the previous government. This government keeps the student finance system under continuous review to ensure that it delivers good value for both students and taxpayers. Over time, this has led to reforms being made to student loan terms. Such reforms consider factors such as macroeconomic conditions, demographic trends and the participation rate in higher education at the time. Therefore, this leads to different plans having different terms and conditions.

When comparing Plan 2 and Plan 5 loans it is important to compare the terms in the round. Whilst Plan 5 will ask graduates to repay for longer, and from a lower annual income threshold of £25,000, it also increases certainty for borrowers by reducing their interest rate to match inflation only.