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Students: Loans

Volume 472: debated on Tuesday 4 March 2008

To ask the Secretary of State for Innovation, Universities and Skills what assessment his Department has made of the merits of using the (a) retail prices index, (b) consumer prices index and (c) retail prices index excluding mortgage interest payments to calculate interest on student loans. (183933)

The Department keeps the interest rate of student loans under review but has no plans to deviate from the retail prices index (RPI) which reflects price movements across the whole economy. The RPI has been used since the introduction of student loans and ensures that borrowers repay the same, in real terms, as the amount borrowed.

Interest rates on loans are already generously subsidised in a way which is fair both to borrowers and to the taxpayer.