Kemi Badenoch pledges to cut interest paid on student loans
Kemi Badenoch has pledged to reduce the amount of interest paid on some student loans amid widespread concerns about costs.
The Conservative Party has promised to cap the rate of Plan B loans at the retail price index (RPI), in a move that will further increase pressure on the Treasury.
Following Chancellor Rachel Reeves’ November budget, the salary threshold at which repayments begin under the scheme will be frozen at £29,385 for three years, leaving many people having to pay more.
Interest on Plan 2 loans is charged up to RPI inflation plus 3%, depending on how much the graduate earns.
The Conservative leader announced plans to limit this to the RPI only; The Conservative Party claims this will help more graduates pay off their debts.
Following the backlash to last November’s budget announcement, Ms Reeves suggested the Government could reduce student loan repayments by reducing inflation.
“By reducing inflation we can also reduce the interest on student loans and I think that will make a big difference in making it more affordable,” he said earlier this month.
Campaigners accused the Treasury of acting like a usurer, while Labor deputy leader Lucy Powell described current interest rates on Plan B loans as abysmal and suggested the burden was unfair.
The Conservatives want to cut the number of university entrants by 100,000, saying it would save the Government £3.6bn and fund the same number of extra apprenticeships for 18 to 21-year-olds as part of a “new deal for young people”, the Sunday Times reports.
Young UK citizens starting their first full-time job will also see the first £5,000 of national insurance they pay put into their personal savings account, which can be used to buy a home.
Writing for the Telegraph, Ms Badenoch said: “I am appalled by the situation facing graduates today and it is one of the reasons why millions of young people feel they are in for stitches.
“Schedule 2 student loans, the system used by most people starting college from 2012 to 2023, feel more and more like a scam.”
He added: “If we want a country that rewards work, develops skills and revives pride in practical achievement, we must stop underestimating the educational pathways that build the country.”
The Treasury was contacted to get an opinion on the issue.
