Rising Inflation Drives Another Cut in The Student Loan Interest Rate

With over 70% of students citing finances as their biggest concern it will come as good news that the government has announced a further cap in student loan interest rates to 6.3%. This is for students in England and Wales and is a direct response to rising inflation rates as the UK struggles to tackle the cost-of-living crisis.

In June the government capped student loan rates at 7.3% at a time when the Institute for Fiscal Studies (IFS) predicted the maximum rate could jump as high as 12%.

The new rate of 6.3% will start from September 2022 according to the Department for Education (DfE). Andrea Jenkyns, the Minister for Skills, Further and Higher Education said the new cap was being introduced “to align with the most recent data on market rates”.

Students don’t need to do anything; the new rate will be applied automatically and could see someone with a loan balance of £45,000 reduce their accumulating interest by around £210 per month compared to the 12% interest rate. This reduction is on the total value of the loan, as monthly repayments do not change, and it applies to those on undergraduate (Plan 2) and postgraduate (Plan 3) loans.

Currently almost £20 billion is loaned to around 1.5 million students in England each year. The forecast average debt for borrowers who started their course in 2021/22 is £45,800 by the time they complete their course.

You can find information on financial help for students on the websites below:

https://www.gov.uk/student-finance/extra-help

https://www.shu.ac.uk/schools-and-community-outreach/student-resources/student-finance

https://su.sheffield.ac.uk/advice-and-support/money/funding/financial-help-from-the-university

https://www.sheffield.ac.uk/undergraduate/fees-funding/loans

We hope you found our blog ‘Rising Inflation Drives Another Student Loan Interest Rate Cut’ helpful and please remember if you need any assistance securing your student accommodation in Sheffield, please don’t hesitate to contact us. We’re waiting for your call.