The cap on student loans in England and Wales will be reduced to 6.3% from September.
Rising Retail Price Index (RPI) Inflation meant the borrower was going to face his 12% interest rate, but the cap had already been cut to his 7.3%. I was.
This change will affect students in England and Wales on Plan 2 (undergraduate) and Plan 3 (postgraduate) loans.
If you start your undergraduate program anywhere in the UK after September 2012, you will be in Plan 2 repayment plan.
The Department of Education (DfE) says today's announcement means that graduates and current students will save hundreds of pounds each year.
This shows an example of a borrower with a student loan balance of £45,000.
The government claims this person will cut accumulated interest by about £210 per month compared to his 12% interest rate.
This is based on the total amount of the loan as the monthly payment remains the same, only the interest rate.
Your monthly student loan repayment is based on your income, not your interest rate or amount borrowed.
Typically, loan repayment begins at the beginning of the tax year after completing or terminating a course, but if you have income above the "repayment threshold", your loan will be repaid. is started.
For Plan 2 loans, if your income exceeds £524, you Start repaying. £2,274 a week, month or £27,295 a year, before taxes and other deductions.
And if you are on a postgraduate loan, your income must be over £403 a week, £1,750 a month or £21,000 a year.
However, the interest rate cut comes ahead of major changes to the student loan system that are due to come into effect from September 2023.
Repayment limits will be reduced to £25,000 annually. For those starting the course next year, the period for graduates to repay their loans will be extended by 10 years.
Minister for Skills Andrea Jenkins said: We want to reassure people of the impact of price increases and that we are stepping up to provide as much support as we can.
We have announced that we will be lowering the student loan interest rate cap from 12% to 12%, and we are now lowering the student loan interest rate further to 6.3%, the rate applicable today, in line with the latest data on market rates.
“We have reduced future interest rates for students starting tertiary education in September 2023 and for those currently considering their next steps. You won't have to pay back more than you borrowed.Real terms.
A student loan company spokeswoman said: "Interest rate changes are applied automatically.
"Customers are encouraged to use SLC's online repayment service to regularly check their loan balances and repayment information and ensure their contact information is up to date."