Student Loans: Interest Rates

Lord Forsyth of Drumlean Excerpts

Monday 11th September 2017 Lords Chamber

[Viscount Younger of Leckie]

My Lords, the details of the scheme continue to be kept under review, but the student loan system is working well. The Government’s reforms to the undergraduate student finance system have ensured that it is financially sustainable for the taxpayer in the long term, while enabling those with the talent to benefit from a higher education to do so. Young people from the poorest areas are 43% more likely to go to university than they were in 2009-10. This is a very good step in the right direction.

[Lord Forsyth of Drumlean (Con)]

My Lords, can my noble friend explain why the Government cut the discount rate—their own measure of the liability for the public—arguing that they were able to borrow money more cheaply, and at the same time hugely increased the interest rate that students have to pay? Given that three-quarters of students do not pay their student loan back in full, those who do will be paying back several times what they actually borrowed.