Don’t increase student loan interest rate to 12%, and tie to base rate instead

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Petition Action

Don’t increase student loan interest rate to 12%, and tie to base rate instead

Petition Details

The Govt should not increase interest rates on student loans. They should match the Bank of England base rate instead, currently 0.75%. If all current Plan 2 students are charged interest of 12%, the yearly interest charged a loan of £30k would be around £3600, which is added to the principal.

Additional Information

If a talented student who succeeds and earns just in excess of £27,296 per annum is also charged 12% per annum, on a £50,000 loan the interest charge would be £6000 per annum on the principal amount. They would also be charged another 12% on the interest accumulated during the third year of £432, therefore a total interest charge of £6432.

For lower earners, if the interest rate was increased to 12% and the repayment amount not adjusted, the interest charge would always exceed the repayment amount and the loan value will never get repaid, and repayments will run into the age of 60s.

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