Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential impact of compound interest on the long-term balances of student loan borrowers including those with intermittent or low earnings.

It is important that student loans are subject to interest, to ensure that those who can afford to do so contribute to the full cost of their degree. Lower earning borrowers, and those who do not go on to repay their loan in full, are protected. The regulations provide that at the end of the loan term any outstanding loan debt, including interest accrued, will be cancelled at no detriment to the borrower. Debt is never passed on to family members or descendants.

Borrowers on intermittent incomes are also protected as repayments are based on earnings, not on the rate of interest or the size of debt. This means if their income drops, so do their repayments. Interest rates do not have an immediate cash impact on the cost of living for borrowers, as interest rates do not affect monthly student loan repayments.