Overview

This bill aims to limit the interest rate applied to outstanding student loan debt in England and Wales. It changes how the interest rate is calculated, linking it to the annual rate of inflation as measured by the Consumer Prices Index (CPI).

Description

The Student Loans (Debt Interest) Bill amends the Education (Student Loans) (Repayment) Regulations 2009 and the Teaching and Higher Education Act 1998. Key changes include:

• Interest Rate Calculation: For student loans taken out in 2020 or later, the interest rate will be capped at the annual rate of the Consumer Prices Index (CPI) for all items published by the Office for National Statistics for the March preceding the academic year. This replaces the previous system, which applied a variable interest rate tied to the RPI (Retail Prices Index).
• Legislation Amended: The bill modifies both the 2009 student loan repayment regulations and the 1998 Teaching and Higher Education Act to reflect this new interest rate calculation and ensure consistency.
• Geographical Scope: The bill applies only to England and Wales.

Government Spending

The bill may increase government spending. The precise figure is not specified in the provided text, but any rise in costs associated with the change in interest calculation is to be covered by parliamentary funds.

Groups Affected

The bill primarily affects:

• Student Loan Borrowers (England & Wales): They will benefit from lower interest rates on their student loans if inflation remains lower than previously applied variable rates.
• UK Government: They will face potentially increased costs due to lower interest income from student loans.

Powered by nyModel