Question to the Department for Education:

To ask His Majesty's Government why interest rates on student loans are set using the Retail Prices Index rather than the Consumer Prices Index.

Interest rates on student loans have been consistently linked to a widely recognised and adopted measure of inflation. Interest rates are set in legislation in reference to the Retail Price Index (RPI) from the previous March and are applied annually on 1 September until 31 August.

The Office for National Statistics has undertaken a substantial programme of work over the past two years to enhance how inflation is measured and this will be carried over into student loans. The Office for Budget Responsibility has confirmed that from 2030 at the earliest, movements in RPI will be aligned with the Consumer Price Index (CPI). Further details are available at:

https://obr.uk/box/the-long-run-difference-between-rpi-and-cpi-inflation/.