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Written question asked by Shaun Woodward (Labour) on Monday, 15 July 2013, in the House of Commons. It was due for an answer on Wednesday, 17 July 2013. It was answered by Lord Willetts (Conservative) on Monday, 2 September 2013 on behalf of the Department for Business, Innovation and Skills.

Students: Debts

Question

(2) what estimate he has made of the average interest rate on debt relating to loans (a) derived from public funding and (b) provided by the private sector taken out by a student at an institution in England and Wales completing (i) a three year undergraduate degree course, (ii) a two year foundation degree course and (iii) a one year postgraduate degree course in each of the next 10 years; and if he will make a statement.

Mr Woodward:

Answer

The interest rate charged on student loans in each of the last five years can be found on the Student Loans Company (SLC) website. The rate on this type of income contingent loan is set by using the March retail prices index (RPI) figure, and applying that rate of interest for 12 months commencing 1 September until 31 August. However, there is a mandatory low interest cap, which means that the interest rate must be adjusted if the base rate plus 1% across a specified group of banks is lower than RPI.

http://www.studentloanrepayment.co.uk/portal/page?_pageid =93,6678642&_dad=portal&_schema=PORTAL

For new scheme loans available to new students from September 2012, the rate is also set by reference to the March RPI figure but with an additional 3% added to the rate for those studying and up until the April after leaving their course. The interest rate charged to borrowers once they become liable to repay will be dependent on their income. The rate of interest charged on these loans is also set out in detail on the SLC website here:

http://www.studentloanrepayment.co.uk/portal/page?_pageid =93,6678755&_dad=portal&_schema=PORTAL

The rates of interest detailed above will apply to students on both a three year undergraduate degree course and a two year foundation degree course. Postgraduate degree students are not eligible for publicly funded loans.

Estimates of the average interest rate on publicly funded student loans for the next 10 years are not available.

Students are a heterogeneous group and the private sector is likely to assess each individual before deciding whether to offer them a loan and what interest rate to charge. We are unable to provide information on the average interest rate on debt relating to loans provided by the private sector.

Secondary information

Type
Written question
Reference
166248; 567 c140W
Session
2013-14
Subjects
Debts Fees and charges Higher education Interest rates Loans Students Postgraduate education
Contains statistics
Yes
Link
View this Written question on www.publications.parliament.uk