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Ministers to announce plan to prevent graduates' debt rising

Caps to curb student loan misery: Ministers to announce plan to prevent thousands of pounds being added to graduates’ debt

  • Ministers will step in to stop student loan interest rates soaring to 12 per cent
  • Plan will involve a cap on rates and prevent £1,000s added to graduates’ debt
  • This comes as inflation is warned to cause ‘rollercoaster ride’ for borrowers

Ministers will step in to stop student loan interest rates soaring to 12 per cent, the Daily Mail can reveal. 

They are expected to announce plans as early as this week to cap the rates and prevent thousands of pounds being added to graduates’ debt. 

Analysis by the Institute for Fiscal Studies last month warned that rising inflation would cause a ‘rollercoaster ride’ for borrowers. 

Economists said the highest earners, who took out a student loan since 2012, would see the maximum interest rate rise from 4.5 per cent to an ‘eye-watering’ 12 per cent for half a year. 

Ministers will step in to stop student loan interest rates soaring to 12 per cent, the Daily Mail can reveal (stock image) 

They are expected to announce plans as early as this week to cap the rates and prevent thousands of pounds being added to graduates’ debt (stock image) 

The IFS said it would mean that with a ‘typical loan balance of around £50,000, a high-earning recent graduate would incur around £3,000 in interest over six months’. 

Student loan interest rates are not supposed to rise above market rates. 

But delays between when the market rate is measured and the Department for 

Education taking action mean that between September 2022 and February 2023, students would be paying uncapped rates. 

After February next year, the interest rates would fall again.

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