Question to the Department for Education:

To ask the Secretary of State for Education, what assessment she has made of the potential impact of interest accruing during maternity leave and periods of part-time work on the loan balances of women graduates with Plan 2 loans.

Plan 2 was designed and implemented by the previous government. Interest is applied at Retail Price Index (RPI) for borrowers whose earnings are below the repayment threshold, including those on statutory maternity leave. This means that the value of their outstanding loan will not increase in real terms.

Under this government, borrowers receiving Plan 5 student loans, accrue interest at RPI only, currently 4.1%, so graduates, including high-earners, will not repay more than they borrowed in real terms. Under all repayment plans, borrowers whose earnings fall below the repayment threshold are not required to make repayments.

Graduates only begin repaying once their earnings exceed the repayment threshold, paying 9% of income above that level. If earnings fall, such as when on statutory maternity leave, so do a borrowers repayments. Therefore, whilst interest accrues on loan balances until the loan has been repaid in full or cancelled, interest rates do not impact monthly repayments made by borrowers.

For all borrowers, any outstanding loan, including interest accrued, will be cancelled after the loan term ends, and debt is never passed on to family members or descendants. There are no commercial loans that offer this level of protection to borrowers.