Question to the Department for Education:

To ask the Secretary of State for Education, whether her Department has made an assessment of the potential impact of removing interest charges from student loans for UK nationals on costs to the public purse.

Education is a devolved matter, and this response outlines the information for England only.

The government keeps the student finance system under continuous review to ensure that it delivers good value for both students and taxpayers.

Student loans are subject to interest to ensure that those who can afford to do so contribute to the full cost of their degree. To consider both students and taxpayers and ensure the real value of the loans over the repayment term, interest rates are linked to inflation.

Interest rates do not impact monthly repayments made by student loan borrowers. Regular repayments are based on a borrower’s monthly or weekly income, not on interest rates or the amount borrowed. Outstanding debt, including interest built up, is cancelled after the loan term ends (or in case of death or disability) at no detriment to the borrower.

A full equality impact assessment of how the student loan reforms may affect graduates under Plan 5 was produced and published in February 2022, and can be found here: https://www.gov.uk/government/publications/higher-education-reform-equality-impact-assessment.