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Friday, Sep 30, 2022

Student loan interest rates slashed for second time amid cost of living crisis

Student loan interest rates slashed for second time amid cost of living crisis

The change comes after the government previously announced that student loan interest rates were due to be reduced from 12% to 7.3%. Now, they are set to be even lower.

Student loan interest rates in England and Wales are set to be cut for a second time to protect borrowers from rising inflation amid the cost of living crisis.

Rates will be slashed to 6.3% from September, the Department for Education (DfE) has announced.

The change comes after the government revealed in June that the student loan interest rates were to be reduced from 12% to 7.3%.

Minister for skills, further and higher, Andrea Jenkyns, said the new cap was being introduced "to align with the most recent data on market rates".

The new rates will reduce student loan interest rates by the largest amount on record, the DfE added.

Borrowers are not required to do anything in light of the change, as it will be applied automatically, the Student Loans Company has said.

The new rates will affect those on undergraduate (Plan 2) and postgraduate (Plan 3) loans.

As a result of the reduction, someone with a student loan balance of £45,000 would decrease their accumulating interest by around £210 per month compared to 12% interest rates, the DfE said.

This reduction is on the total value of the loan, as monthly repayments do not change.

"We understand that many people are worried about the impact of rising prices, and we want to reassure people that we are stepping up to provide support where we can," Ms Jenkyns added.

"For those starting higher education in September 2023, and any students considering that next step at the moment, we have cut future interest rates so that no new graduate will ever again have to pay back more than they have borrowed in real terms."

Borrowers have been encouraged to use the Student Loans Company's online repayment service to regularly check their balance and their repayment information, as well as making sure their contact information is up to date.

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