Today’s announcement that the government is capping the interest rates applied to student loans taken out since 2012 has been welcomed by the Mayor of the West of England.
Helen Godwin leads a region which four universities call home, and has among the highest levels in the country of graduates choosing to stay after they finish their studies.
Helen Godwin, Mayor of the West of England, said:
“The cost of living is continuing to affect local families, with changes like this one set to help hold back further pressure on household budgets. Today’s news will therefore be welcomed by the great many graduates across the West of England, as a positivefirst step towards wider reform of student finance – moving away from a system where how much you pay depends on how much money your parents had when you were growing up.
“Everyone deserves the opportunity to get on in life, whether that involves university or not. Our Child Poverty Action Plan – which followed a campaign for the two-child benefit cap to be scrapped, which it was this week – and upcoming Skills Strategy forour region will help enhance the life chances of people across the West.”
The new interest rate cap for Plan 2 and Plan 3 loans is set to be introduced from September, reducing interest to a maximum of 6%. The current level of interest on these loans is currently equivalent to the Retail Prices Index measure of inflation plus upto 3% (6.2%).
The government’s reforms also include reintroducing extra support for students from low-income families, alongside a wider ambitious target of two thirds of young people taking a gold standard apprenticeship, higher-level training, or heading to university.
Announcingthe news, Minister for Skills, Jacqui Smith, said:
“We know that the conflict in the Middle East is causing anxiety at home, and while the risk of global shocks is beyond our control, protecting people here is not.
“Capping the maximum interest rate on Plan 2 and Plan 3 student loans will provide immediate protection for borrowers, supporting those who are most exposed within this already unfair system.
“We’re acting now to defend against the consequences of far-away conflicts in an uncertain world. More broadly, we’re bringing back maintenance grants and continuing to look at the broken Plan 2 system we inherited, and the wider student finance system,to make it fairer for students, graduates and taxpayers.”
