Overview

This bill aims to reduce the interest rate applied to outstanding student loan debt in England and Wales. It links the interest rate to the Consumer Prices Index (CPI), preventing it from exceeding inflation.

Description

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

• Interest Rate Change: For academic years commencing in 2020 and beyond, the interest rate on student loans will be capped at the annual rate of the Consumer Prices Index (CPI) for all items, as published by the Office for National Statistics for the previous March. This replaces the previous system where the rate was not capped.
• Legislation Amendment: The bill amends the 1998 Act to ensure that regulations used to calculate interest on student loans cannot result in a rate higher than the CPI.
• Geographical Scope: The bill applies only to England and Wales.

Government Spending

The bill may lead to an increase in government spending as lower interest rates will mean less revenue generated from student loan interest payments. The exact financial impact is not specified in the bill text.

Groups Affected

This bill primarily impacts:

• Student Loan Borrowers in England and Wales: They will benefit from lower interest rates on their student loans, reducing the total amount they repay.
• The UK Government: The government will receive less revenue from student loan interest payments, potentially increasing the overall cost of the student loan system.

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