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The UK government has announced a cap on interest rates for student loans at 6% for plan 2 and 3 loans, effective from September. This move has been welcomed by Labour MPs, who see it as a sign that the government is open to wider reform of the student loan system.
The UK government has capped interest rates on student loans at 6% for plan 2 and 3 loans. This change will protect borrowers from short-term increases in inflation due to global shocks. Currently, graduates on plan 2 loans pay back 9% of their earnings above a certain salary, with interest charged at the Retail Price Index rate plus up to 3%. The government's move has been welcomed by Labour MPs, who have been calling for reform of the student loan system. The cap on interest rates will not affect monthly repayments but will impact the total amount owed. Labour MPs are hopeful that this is a sign of more widespread reform to come.
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