Question to the Department for Education:

To ask the Secretary of State for Education, what assessment her Department has made of the impact of student loan interest rates on graduates’ financial outcomes.

This government recognises the concerns caused by high student loan account balances and interest rates, resulting from loan plans designed by previous governments. That is why we are capping the maximum interest rates on Plan 2 and Plan 3 student loans at 6% for the 2026/27 academic year, protecting students and graduates from the risk of short-term inflationary pressures.

Interest rates affect lifetime repayments for those who repay in full, which includes borrowers with small balances as well as higher earners. Monthly repayments depend solely on earnings above the repayment threshold, and those earning below this level are not required to make any repayments. Outstanding balances are cancelled at the end of the loan term.

The government publishes annual forecasts for student loans in England. These include statistics on borrower repayments. The latest publication can be found here: https://explore-education-statistics.service.gov.uk/find-statistics/student-loan-forecasts-for-england/2024-25.