Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential impact of applying an interest rate of RPI plus 3% to Plan 2 student loans for graduates earning over £50,270 on the disposable income of those graduates.

Plan 2 student loans were designed and implemented by previous governments. Students in England starting degrees under this government have different arrangements.

Plan 2 loans interest rates are applied at the Retail Price Index (RPI) only, then variable up to RPI +3% depending on earnings. Interest rates do not impact monthly repayments made by student loan borrowers, which stay at a constant rate of 9% above an earnings threshold to protect lower earners. If a borrower’s salary remains the same, their monthly repayments will also stay the same. Any outstanding loan and interest is written off at the end of the loan term, and debit is never passed on to family members or descendants.