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.
Asked by: Stephanie Peacock (Labour - Barnsley East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what support is available to homeowners who have accrued unmanageable debt due to increased mortgage interest rates.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
The pricing of mortgages is a commercial decision for lenders, including relevant credit unions, in which the Government does not intervene. However, we recognise this is a concerning time for mortgage borrowers.
On Friday 23 June the Chancellor met with the UK’s largest mortgage lenders, UK Finance and the Financial Conduct Authority to discuss how lenders will provide support for those who encounter problems keeping up with their mortgage payments. At this meeting, lenders agreed to a new Mortgage Charter to support borrowers struggling with their mortgage payments that was published on 26 June. The Charter sets out the standards signatory lenders, which includes some credit unions, will adopt when helping their customers, including new flexibilities to help customers manage their mortgage payments over a short period.
The Charter is in addition to the significant safeguards already in place for consumers in the mortgage market. Financial Conduct Authority rules require lenders to engage individually with their customers who are struggling or who are worried about their payments in order to provide tailored support. The Government has also taken measures aimed at helping people to avoid repossession, including Support for Mortgage Interest (SMI) loans, and protection in the courts through the Pre-Action Protocol.
More widely, the Government is taking forward amendments to the Credit Unions Act 1979 through the Financial Services and Markets Act (FSMA) 2023 to allow the credit union sector to grow, by offering a wider range of products and services to their members. FSMA 2023 is central to delivering the Government’s vision to grow the economy and create an open, sustainable, and technologically advanced financial services sector.
Asked by: Stephanie Peacock (Labour - Barnsley East)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to increased mortgage interest rates, what steps his Department is taking to promote credit unions.
Answered by Andrew Griffith - Minister of State (Department for Science, Innovation and Technology)
The pricing of mortgages is a commercial decision for lenders, including relevant credit unions, in which the Government does not intervene. However, we recognise this is a concerning time for mortgage borrowers.
On Friday 23 June the Chancellor met with the UK’s largest mortgage lenders, UK Finance and the Financial Conduct Authority to discuss how lenders will provide support for those who encounter problems keeping up with their mortgage payments. At this meeting, lenders agreed to a new Mortgage Charter to support borrowers struggling with their mortgage payments that was published on 26 June. The Charter sets out the standards signatory lenders, which includes some credit unions, will adopt when helping their customers, including new flexibilities to help customers manage their mortgage payments over a short period.
The Charter is in addition to the significant safeguards already in place for consumers in the mortgage market. Financial Conduct Authority rules require lenders to engage individually with their customers who are struggling or who are worried about their payments in order to provide tailored support. The Government has also taken measures aimed at helping people to avoid repossession, including Support for Mortgage Interest (SMI) loans, and protection in the courts through the Pre-Action Protocol.
More widely, the Government is taking forward amendments to the Credit Unions Act 1979 through the Financial Services and Markets Act (FSMA) 2023 to allow the credit union sector to grow, by offering a wider range of products and services to their members. FSMA 2023 is central to delivering the Government’s vision to grow the economy and create an open, sustainable, and technologically advanced financial services sector.
Asked by: Lord Taylor of Warwick (Non-affiliated - Life peer)
Question to the Department for Energy Security & Net Zero:
To ask His Majesty's Government what steps they are taking to encourage investors to support (1) climate resolutions, and (2) sustainable investment practices, particularly in sectors heavily reliant on fossil fuels.
Answered by Lord Callanan - Parliamentary Under Secretary of State (Department for Energy Security and Net Zero)
The 2023 Green Finance Strategy set out several actions the Government is taking to support sustainable investment practices. These include a commitment to consult on a UK Green Taxonomy later this year; setting out next steps for transition planning disclosure requirements for the largest UK companies; and providing further detail on the Government's response to using International Sustainability Standards in the UK.
Asked by: Tulip Siddiq (Labour - Hampstead and Kilburn)
Question to the Department for Education:
To ask the Secretary of State for Education, what steps she is taking to support individuals on student loan plans (a) 2 and (b) 4.
Answered by Robert Halfon
Decisions on student finance have to be taken alongside other spending priorities to ensure the system remains financially sustainable and the costs of higher education (HE) are shared fairly between students and taxpayers, not all of whom have benefited from going to university.
The government has continued to increase maximum loans and grants for living and other costs for plan 2 student loans each year. Maximum support has been increased by 2.3% for the 2022/23 academic year, with a further 2.8% increase announced for 2023/24. In addition, 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 costs of HE under control. By 2024/25, maximum fees will have been frozen for seven years.
The government recognises the additional cost of living pressures that have arisen this year and that are impacting students. The department has made £276 million of student premium and mental health funding available for the 2023/24 academic year to support successful outcomes for students, including disadvantaged students.
Student loans are available to all eligible students, irrespective of background or financial history, and include significant protections. Monthly student loan repayments are calculated by income rather than by interest rates or the amount borrowed. If a borrower’s earnings are below the relevant repayment threshold, they will not be required to make any repayments. At the end of the loan term, or in case of death or disability, any outstanding loan debt, including interest accrued, will be written off at no detriment to the borrower. No commercial loans offer this level of 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, it will reduce the maximum plan 2, plan 3 and plan 5 interest rate.
Plan 4 student loans are issued by the Scottish Government, which has responsibility for HE in Scotland and determines the student finance arrangements for Scottish students.
Asked by: Fleur Anderson (Labour - Putney)
Question to the Department for Education:
To ask the Secretary of State for Education, what assessment her Department has made of the effect of the cost of public transport on students' (a) finances and (b) mobility.
Answered by Robert Halfon
The department continually monitors the impact of rising prices on students. The department recognises that the availability of student accommodation has been impacted by the current financial backdrop and that this can create additional transport costs for students. This is why the government has continued to increase living costs support each year with a 2.3% increase to maximum loans and grants for living and other costs for the 2022/23 academic year, and a 2.8% increase for the 2023/24 academic year.
There is £276 million of Student Premium and Mental Health funding available this 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.
The department works with the Office for Students to ensure universities support students in hardship using both hardship funds and drawing on the Student Premium as higher education (HE) providers have established their own hardship funds, which allow discretionary funds to be paid to students who are in need.
Decisions on student finance will have to be taken alongside other spending priorities to ensure the system remains financially sustainable and the costs of HE are shared fairly between students and taxpayers, not all of whom have benefited from going to university.
Asked by: Paula Barker (Labour - Liverpool, Wavertree)
Question to the Department for Education:
To ask the Secretary of State for Education, whether she has made an assessment of the potential merits of providing (a) financial grants, (b) interest free and (c) lower interest loans to students in the context of rises in the cost of living.
Answered by Robert Halfon
The government recognises the cost of living pressures that are impacting students. The department has made £276 million of student premium and mental health funding available for the 2023/24 academic year to support students who need additional help to succeed, including disadvantaged students.
We have continued to increase maximum loans and grants for living and other costs each year, with a 2.3% increase for the 2022/23 academic year, and a further 2.8% increase for 2023/24. In addition, students eligible for benefits, such as those who are responsible for a child, qualify for higher rates of loans to help them with their living costs at university.
Students who have been awarded a loan for living costs for the 2022/23 academic year that is lower than the maximum, and whose household income for the 2022/23 tax year has dropped by at least 15% compared to the income provided for their original assessment, have been able to apply for their entitlement to be reassessed.
The government has no plans to reintroduce maintenance grants, as it believes that income-contingent student loans are a fair and sensible way of financing higher education. In 2022, we had record numbers of 18-year-olds going to university, including those from disadvantaged backgrounds. An English 18-year-old from a disadvantaged background today is 86% more likely to go to university than in 2010.
The student funding system must provide value for money for all at a time of rising costs. It is important that a sustainable student finance system is in place, that is fair to both students and taxpayers. Interest is an important part of this. If interest payments were removed altogether, it would increase the burden to taxpayers, not all of whom will attend university. The government does not plan to further reduce interest rates on student loans. In 2022/23, student loan interest reduced public sector net debt by around £4.8 billion according to published data from the Spring 2023 Office for Budget Responsibility Economic Outlook.
Student loans are different to commercial personal loans. Monthly student loan repayments are calculated by income rather than by interest rates or the amount borrowed. No borrower will be repaying more per month as a result of changes to interest rates. Borrowers are protected. If income is below the relevant repayment threshold, or a borrower is not earning, repayments stop. Any outstanding loan balance, including interest accrued, is written off after the loan term ends, or in case of death or disability, at no detriment to the borrower. Student loans are subsidised by the taxpayer, and the government does not make a profit from the loan scheme.
To further protect borrowers, where the government considers that the student loan interest rate is too high in comparison to the prevailing market rate, it will reduce the maximum Plan 2, Plan 3 and Plan 5 interest rate by applying a cap.
New students who start courses on or after 1 August 2023 will receive their loans on new Plan 5 terms. Students with Plan 5 loans will benefit from a reduction in the interest rate to Retail Price Index only. This change ensures that borrowers on the new Plan 5 terms will not repay more than they originally borrowed over the lifetime of their loans, when adjusted for inflation.
Decisions on student finance have had to be taken alongside other spending priorities to ensure the system remains financially sustainable and the costs of higher education are shared fairly between students and taxpayers, not all of whom have benefited from going to university.