Penal loan rates for 50,000 grads
that the full-year figures will easily pass 2016’s total.
Angela Rayner, the shadow education secretary, said the figures showed “a deeply unfair system” and reiterated the Labour Party’s calls to scrap tuition fees entirely.
Amatey Doku, of the National Union of Students, said: “Absurdly high interest rates are only a small part of the problem but the Government’s willingness to continually add to the burden of student debt, and change the terms of repayment, is indicative of a complete disregard for the concerns of students, their families and the taxpayer, who will have to cover the cost of unpaid debt.
“It seems that the Government is bent on covering their ears and humming loudly to block out the critics as they make things worse and worse.”
Assuming those 50,000 graduates have the average debt of £50,000, the additional interest accrued could be as high as £75m a year. Of course, in reality some of those would be earning more than £41,000, triggering the highest rate of interest in any case.
In October the Government announced that new graduates would not have to start repaying loans until they earned £25,000, up from the current £21,000 threshold. In addition, maximum tuition fees will be frozen at £9,250 for the next academic year, beginning in autumn 2018.
More drastic changes may also be on the horizon after this newspaper disclosed that Justine Greening, the former education secretary, had opposed Tory plans to cut fees ahead of last year’s party conference.
Martin Lewis, founder of moneysavingexpert.com and a critic of the student loan system, said the penalty rate was “a psychological problem”. But he added that as most people were not expected ever to pay off their loans, the added interest was unlikely to be a practical concern for most people.
“The Student Loans Company should be high up on graduates’ list of companies to contact when they change address,” he said.
Telegraph Money has previously highlighted the ongoing issues with graduates repaying their loans. Many discovered they had paid off more than they actually owed – in some cases by up to £10,000.
In November the Government said it would work to fix the problem by April 2019.
‘The figures expose a deeply unfair system’
Soaring: some graduates are being charged high penalty interest rates on their loans