London Daily

Focus on the big picture.
Saturday, Jul 12, 2025

Top student loan interest rate cut by 5% in England

Top student loan interest rate cut by 5% in England

The maximum interest rate on student loans in England is being cut by almost 5%, the government says.

The maximum rate had been predicted to rise to 12% in the autumn, according to the Institute for Fiscal Studies (IFS).

Higher Education Minister Michelle Donelan said the cap was being reduced to 7.3% to provide "peace of mind for graduates" as the cost of living grows.

The National Union of Students (NUS) said the interest cap was "still cruelly high".

The IFS welcomed the announcement but said it would "have little of no effect" on most graduates' repayments.

The interest rate on the loan for those currently at university in England is calculated by adding 3% to the retail price index (RPI) measure of inflation.

The RPI figure confirmed in April set the interest rate for the coming academic year - and the IFS said the maximum rate on student loans would jump from 4.5% this year to 12% from September 2022.

Confirmation of student interest rates is usually made in August, but Ms Donelan said the government had "brought forward this announcement to provide greater clarity and peace of mind for graduates at this time".

"The government has always been clear that where it can help with rising prices we will, and I will always strive for a fair deal for students," she added.

However, Larissa Kennedy, NUS president in the UK, said: "These interest rate figures are still cruelly high.

"While some graduates might breathe a sigh of relief that the interest rate is no longer in double figures, ministers should be prioritising providing urgent cost-of-living support here and now," she said.

She added that the government "should introduce rent protections, offer basic levels of maintenance support and announce a cost-of-living payment for all students".

The announcement from the government does not change the amount that borrowers repay each month.

For students starting degree courses from 2023, the interest rate will be fixed at a lower level.

Ben Waltmann, senior research economist at the IFS, said it was "great" that "the government has decided to take action to avoid the rollercoaster" of interest rates - but "for most graduates this announcement will have little or no effect on their repayments".

That is because most people with undergraduate loans will "likely never pay off their loans in full, so the interest rate never affects their repayments", he said.

"Even for the typically high-earning graduates who do pay off their loans, very high interest rates from September to February would have been counterbalanced by very low interest rates further down the line, which now won't come to pass either," he added.

Newsletter

Related Articles

0:00
0:00
Close
Reparations argument crushed
Rainmaker CEO Says Cloud Seeding Paused Before Deadly Texas Floods
A 92-year-old woman, who felt she doesn't belong in a nursing home, escaped the death-camp by climbing a gate nearly 8 ft tall
French Journalist Acquitted in Controversial Case Involving Brigitte Macron
Elon Musk’s xAI Targets $200 Billion Valuation in New Fundraising Round
Kraft Heinz Considers Splitting Off Grocery Division Amid Strategic Review
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
EU Proposes New Tax on Large Companies to Boost Budget
Trump Imposes 35% Tariffs on Canadian Imports Amid Trade Tensions
Junior Doctors in the UK Prepare for Five-Day Strike Over Pay Disputes
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
Bitcoin Reaches New Milestone of $116,000
Biden’s Doctor Pleads the Fifth to Avoid Self-Incrimination on President’s Medical Fitness
Grok Chatbot Faces International Backlash for Antisemitic Content
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
US Imposes New Tariffs on Brazilian Exports Amid Political Tensions
Azerbaijan and Armenia are on the brink of a historic peace deal.
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Weinstein Victim’s Lawyer Says MeToo Movement Still Strong
U.S. Enacts Sweeping Tax and Spending Legislation Amid Trade Policy Shifts
Football Mourns as Diogo Jota and Brother André Silva Laid to Rest in Portugal
Labour Expected to Withdraw Support for Special Needs Funding Model
Leaked Audio Reveals Tory Aide Defending DEI Record
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
×