Written statement by Jeremy Miles on student loan interest rates
Jeremy Miles MS (@Jeremy_Miles)Welsh Minister for Education and Language on student loan interest rates capped at 6.5% for three months starting December 1, 2022
I made a statement on 5 September 2022 to confirm the intention to cap the interest rate charged to Welsh students on certain loans from September 2022 at 6.3% for a period of three months. This cap was also announced by the British government for English students.
I can now announce that the interest rate will be capped from December 1, 2022 for a further three-month period. The rate for these three months will be 6.5%.
The rate of inflation, which determines the interest charged on some student loans, has increased significantly. Interest rates on these loans would have reached as high as 12% without the September cap. The Welsh government must ensure rates do not exceed the prevailing market rate and has taken action three times in 2021 to cap loan rates and protect students.
With prevailing market rates remaining high, the rate for loans taken out by undergraduate students since 2012 and by postgraduate students will be capped at 6.5% between December 1, 2022 and February 28, 2023. other rate caps may apply if the prevailing market rate continues to be lower than student loan interest rates after that date.
Interest rate changes do not affect monthly student loan repayments, which are charged as a fixed proportion of income. Loan repayments depend on income. Students only repay their loan if they earn above a threshold, and remaining debts are forgiven after thirty years.
The cost of living should never be a barrier to studying at university, which is why the Welsh government offers the most generous grants in the UK. Welsh students have less to repay on average than their English peers. The Welsh government is also offering debt forgiveness of up to £1,500 for each borrower entering repayment, a scheme unique to the UK.
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