Asked by: Charlotte Nichols (Labour - Warrington North)
Question to the Department for Education:
To ask the Secretary of State for Education, for what reason the interest rate on student loans is set higher than the Bank of England base rate.
Answered by Robert Halfon
Information on the proportion of graduates in each plan that will repay their (a) undergraduate and (b) post graduate loans, can be found in the ‘Student loan forecasts for England’ annual statistics publication here: https://explore-education-statistics.service.gov.uk/data-tables/permalink/92168d82-7f22-4d01-d6a4-08dbca2fee12.
The system for setting interest rates on student loans is set out in the Education (Student Loans) (Repayment) Regulations 2009, as amended. Interest rates are applied in relation to the Retail Price Index (RPI). The RPI is determined by the RPI figure for the March prior to the applicable period for new interest rates. In addition, the government, by law, must cap maximum student loan rates to ensure the interest rate charged on the loan is in line with market rates for comparable unsecured personal loans. From 1 September 2023 to 30 November 2023, the maximum interest rate has been set at 7.3% for Plan 2 and Plan 5 undergraduate student loans, and postgraduate student loans, to take into account recent increases in the prevailing market rate. From the 2023/24 academic year, student loan borrowers starting new courses will benefit from interest rates of RPI only. This change ensures that, under the new Plan 5 loan terms, new borrowers will not repay more than they originally borrowed, when adjusted for inflation.
Student loans have very different terms and conditions to commercial loans set with reference to the Bank of England base rate. Unlike commercial unsecured personal loans, student loans are available to all eligible students regardless of their background or financial history. The loans carry significant protections for borrowers. Monthly repayments are based on earnings above the relevant threshold, not on interest rate or amount borrowed. If a borrower’s income drops, so does the amount they repay. If income is below the relevant repayment threshold, or a borrower is not earning, then they do not have to make repayments at all. Any outstanding debt, including interest accrued, is written off after the loan term ends (or in case of death or disability) at no detriment to the borrower. The government is not aware of any commercial loans that offer such protections.
The student finance and funding system must provide value for money for all of society at a time of rising costs. It is important that we have a sustainable student finance system, that is fair to students and fair to taxpayers. The department will continue to keep the terms of the student finance system under review to ensure that they keep delivering value for money for both students and taxpayers.
Asked by: Matt Western (Labour - Warwick and Leamington)
Question to the Department for Education:
To ask the Secretary of State for Education, what estimate she has made of (a) changes in the level of the cost of living for students in the (i) last and (ii) next 12 months and (b) the rate of inflation for students.
Answered by Robert Halfon
The government recognises the additional cost of living pressures that have arisen this year which have impacted students. The Government publishes Equality Impact Assessments of changes to student finance each year. More information can be found at: https://www.gov.uk/government/publications/higher-education-student-finance-2023-to-2024-equality-analysis.
The department has not directly assessed the impact of changes in the cost of living on higher education (HE) students, but closely monitors the evidence produced by other organisations and uses this to inform decision-making. For example, the Office of National Statistics (ONS) published research from interviews with students named ‘ONS student voices research’ and Wonkhe, along with Pearson, have published research on connections between students' financial struggles, wellbeing, and academic progress titled ‘Financial struggles make it harder for students to connect and engage in their university community’. A link to the latter publication can be found here: https://wonkhe.com/blogs/financial-struggles-make-it-harder-for-students-to-connect-and-engage-in-their-university-community/.
Having considered reports such as these, the department has made available £276 million of Student Premium and Mental Health funding for the 2023/24 academic year, to support students who need additional help including disadvantaged students. This funding will complement the help universities are providing through their own bursary, scholarship and hardship support schemes.
We have frozen maximum tuition fees for the 2023/24 and 2024/25 academic years to deliver better value for students and to keep the cost of higher education under control. By 2024/25, maximum fees will have been frozen for seven years.
Additionally, the Government has continued to increase living costs support each year with a 2.8% increase for the 2023/24 academic year. Decisions on student finance had to be taken alongside other spending priorities to ensure the system remains financially sustainable and the costs of HE is shared fairly between students and taxpayers, not all of whom have benefited from going to university.
The government is considering options for loans and grants for living and other costs for the 2024/25 academic year and will be making an announcement in due course.
Asked by: Luke Pollard (Labour (Co-op) - Plymouth, Sutton and Devonport)
Question to the Department for Education:
To ask the Secretary of State for Education, what financial support the Government provides to local authorities for the purposes of investing in early intervention services.
Answered by David Johnston - Parliamentary Under-Secretary (Department for Education)
In 2021/22, local authority gross expenditure on children's and young people's services was £11.9 billion. For 2023/24, the Local Government Finance Settlement has made available up to £59.7 billion for all local government services in England, including spending on early intervention. This is an increase in Core Spending Power of 9.4% in cash terms on 2022/23. How local authorities choose to target that funding across services is down to the discretion of local leaders.
In terms of ongoing funding, the department needs to ensure children’s services are sustainable in the long term. That is key to proposals in the ‘Stable Homes, Built on Love’ strategy, where we are focusing on early, preventative help which can reduce the need for crisis intervention later.
In the lead up to the next Spending Review, the Government will work to ensure the right level of funding for all Children’s Services, including early intervention.
Asked by: Luke Pollard (Labour (Co-op) - Plymouth, Sutton and Devonport)
Question to the Department for Education:
To ask the Secretary of State for Education, what steps the Government is taking to ensure that local authorities have adequate funding to invest in early intervention services.
Answered by David Johnston - Parliamentary Under-Secretary (Department for Education)
In 2021/22, local authority gross expenditure on children's and young people's services was £11.9 billion. For 2023/24, the Local Government Finance Settlement has made available up to £59.7 billion for all local government services in England, including spending on early intervention. This is an increase in Core Spending Power of 9.4% in cash terms on 2022/23. How local authorities choose to target that funding across services is down to the discretion of local leaders.
In terms of ongoing funding, the department needs to ensure children’s services are sustainable in the long term. That is key to proposals in the ‘Stable Homes, Built on Love’ strategy, where we are focusing on early, preventative help which can reduce the need for crisis intervention later.
In the lead up to the next Spending Review, the Government will work to ensure the right level of funding for all Children’s Services, including early intervention.
Asked by: Lloyd Russell-Moyle (Labour (Co-op) - Brighton, Kemptown)
Question to the Department for Education:
To ask the Secretary of State for Education, if she will make an assessment of the potential merits of freezing the interest applied to student finance loans during (a) career breaks and (b) earning reductions relating to childcare responsibilities.
Answered by Robert Halfon
The government wants a sustainable student finance system that is fair to students and taxpayers, and which continues to enable anyone with the ability and the ambition to benefit from higher education to do so. The student finance system protects borrowers, including people on career breaks or with childcare responsibilities, if they see a reduction in their earnings. Student loan repayments are made based on a borrower’s monthly or weekly income, not the interest rate or amount borrowed, and no repayments are made for earnings below the relevant repayment threshold.
The recent student loan (Plan 5 reforms) makes the student loan system fairer for taxpayers and fairer for students, helping to keep the system sustainable in the long term. The new loan plan asks graduates to repay for longer and from an income threshold of £25,000, but also increases certainty for borrowers by reducing interest rates to RPI only. This change ensures that borrowers on the new Plan 5 terms will not repay, under those terms, more than they originally borrowed over the lifetime of their loans, when adjusted for inflation. Lower earners will still be protected. If a borrower’s income is below the repayment threshold of, currently, £25,000 per year, they won’t be required to make any repayments at all. Any outstanding debt, including interest accrued, is written off at the end of the loan term with no detriment to the borrower. No commercial loans offer this level of borrower protection. To further protect borrowers, where the Government considers that the student loan interest rate is too high in comparison to the prevailing market rate (PMR) for comparable unsecured personal loans, it will reduce the maximum student loan interest rate charged by applying a cap in line with the PMR.
A comprehensive equality impact assessment of how the student loan reforms may affect graduates, including detail on changes to average lifetime repayments under Plan 5, was produced and published in February 2022. It is available at: https://www.gov.uk/government/publications/higher-education-reform-equality-impact-assessment.
Asked by: Baroness Kennedy of Cradley (Labour - Life peer)
Question to the Department for Transport:
To ask His Majesty's Government what plans they have to support new tram lines extensions or new tram lines in the East and West Midlands.
Answered by Baroness Vere of Norbiton - Parliamentary Secretary (HM Treasury)
Responsibility for promoting new mass transit schemes, or extensions to existing networks, is devolved to local transport authorities (LTAs) in England. LTAs are best placed to bring forward new mass transit proposals, which could include light rail or tram technology, based on local transport challenges and opportunities.
Currently, the principal way LTAs can access Government funding for mass transit schemes which they wish to prioritise is through the City Region Sustainable Transport Settlements (CRSTS) for eligible Mayoral Combined Authorities. West Midlands Combined Authority has been allocated a Settlement of £1.05 billion between 2022/23 and 2026/27.
In the East Midlands, Nottingham Express Transit is financed under a private finance initiative structure. The current contract, which was signed in 2011, expanded the tram network, doubling the previous size. The cost of this expansion will be met over the 23-year life of the contract, and the Department for Transport makes an annual contribution of £24.95 million per annum, alongside a contribution from Nottingham City Council to pay for this scheme.
Asked by: Dawn Butler (Labour - Brent Central)
Question to the Department for Education:
To ask the Secretary of State for Education, what assessment her Department has made of the impact of accrued interest on student loans on the ability of women to pay off student loan debts.
Answered by Robert Halfon
The Government wants a sustainable student finance system that is fair to students and taxpayers, and which continues to enable anyone with the ability and the ambition to benefit from higher education to do so. The student finance system will continue to protect borrowers, including women on maternity leave, or any person on any form of parental leave, if they see a reduction in their income. Student loan repayments are made based on a borrower’s monthly or weekly income, not the interest rate or amount borrowed, and no repayments are made for earnings below the relevant repayment threshold.
The recent student loan, Plan 5 reforms, will make the student loan system fairer for taxpayers and fairer for students, helping to keep the system sustainable in the long term. The new loan plan asks graduates to repay for longer and from an income threshold of £25,000 per year, but also increases certainty for borrowers by reducing interest rates to match inflation only. This change ensures that borrowers on the new Plan 5 terms will not repay, under those terms, more than they originally borrowed over the lifetime of their loans, when adjusted for inflation.
Lower earners will still be protected. If a borrower’s income is below the repayment threshold of, currently, £25,000 per year, they won’t be required to make any repayments at all. Any outstanding debt, including interest accrued, is written off at the end of the loan term with no detriment to the borrower. No commercial loans offer this level of borrower protection.
A comprehensive equality impact assessment of how the student loan reforms may affect graduates, including detail on changes to average lifetime repayments under Plan 5, was produced and published in February 2022. More information is available here: https://www.gov.uk/government/publications/higher-education-reform-equality-impact-assessment.
Asked by: Dawn Butler (Labour - Brent Central)
Question to the Department for Education:
To ask the Secretary of State for Education, what steps the Government is taking to help ensure there is no adverse financial impact on women of student loan interest accrued while they are on maternity leave.
Answered by Robert Halfon
The Government wants a sustainable student finance system that is fair to students and taxpayers, and which continues to enable anyone with the ability and the ambition to benefit from higher education to do so. The student finance system will continue to protect borrowers, including women on maternity leave, or any person on any form of parental leave, if they see a reduction in their income. Student loan repayments are made based on a borrower’s monthly or weekly income, not the interest rate or amount borrowed, and no repayments are made for earnings below the relevant repayment threshold.
The recent student loan, Plan 5 reforms, will make the student loan system fairer for taxpayers and fairer for students, helping to keep the system sustainable in the long term. The new loan plan asks graduates to repay for longer and from an income threshold of £25,000 per year, but also increases certainty for borrowers by reducing interest rates to match inflation only. This change ensures that borrowers on the new Plan 5 terms will not repay, under those terms, more than they originally borrowed over the lifetime of their loans, when adjusted for inflation.
Lower earners will still be protected. If a borrower’s income is below the repayment threshold of, currently, £25,000 per year, they won’t be required to make any repayments at all. Any outstanding debt, including interest accrued, is written off at the end of the loan term with no detriment to the borrower. No commercial loans offer this level of borrower protection.
A comprehensive equality impact assessment of how the student loan reforms may affect graduates, including detail on changes to average lifetime repayments under Plan 5, was produced and published in February 2022. More information is available here: https://www.gov.uk/government/publications/higher-education-reform-equality-impact-assessment.
Asked by: Stewart Malcolm McDonald (Scottish National Party - Glasgow South)
Question to the Department for Education:
To ask the Secretary of State for Education, if she will make an assessment of the potential financial impact of leaving the EU on students who wish to study abroad; and whether she plans to provide funding to support those students.
Answered by Robert Halfon
English-domiciled students attending an overseas institution as part of their UK course are charged a tuition fee of up to £1,350 for their overseas year of study, 15% of the full year fee rate, and they also qualify for fee loans to meet the full costs of their tuition. The department is freezing maximum tuition fees for the 2023/24 and 2024/25 academic years to deliver better value for students and to keep the cost of higher education (HE) under control. By 2024/25, maximum fees will have been frozen for seven years.
English-domiciled students attending an overseas institution as part of their UK course also qualify for partially means-tested loans for living costs paid at the overseas rate. We have increased maximum loans for living costs each year with a 2.8% increase for the current 2023/24 academic year.
The Government prioritises support for eligible English-domiciled students undertaking designated courses at UK HE institutions to ensure the student finance system remains sustainable.
The Turing Scheme, the UK Government’s global programme for students to study and work abroad, also exists to support students at UK institutions who wish to do so. This is on top of the student finance support that HE participants may already qualify for. A UK-wide scheme, funding is available at set rates to contribute to the living costs of participating students. All schools and further education participants will receive funding for travel costs, as well as HE students from disadvantaged backgrounds. Funding also covers visas, passports and related travel insurance for all participants from disadvantaged backgrounds as well as up to 100% of actual additional costs participants might incur as a result of being disabled and/or having a special educational need.
Turing Scheme funding for students across the UK is only available for students who are studying at registered UK education providers. The Scheme supports international mobilities of up to a year, and not the entire duration of a course of study or training undertaken overseas.
Asked by: Henry Smith (Conservative - Crawley)
Question to the Foreign, Commonwealth & Development Office:
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, whether he has had discussions with the International Finance Corporation on preventing funding for livestock projects with (a) low standards of animal welfare and (b) routine prophylactic use of antimicrobials; and if he will make a statement.
Answered by Andrew Mitchell - Minister of State (Foreign, Commonwealth and Development Office) (Minister for Development)
Sustainable investments in livestock are key to preventing malnutrition and reducing poverty. As a shareholder and partner to the International Finance Corporation (IFC), the UK works closely with the IFC to ensure that it complies with rigorous and internationally recognised standards. The IFC's assessments of its projects is aligned with EU requirements and standards, including on animal health protocols and the use of antibiotics in animal production. The IFC does not invest in clients that fail to achieve industry standard certification for animal welfare within 36 months. The UK will continue to monitor the implementation of these standards and engage with IFC Management on its approach to livestock production.