‘We are pricing people out of education’ - Kate Osborne MP’s concerns about student loan interest rates
The Jarrow and Gateshead East MP highlights the obscene interest rates faced by graduates.
Kate Osborne, the MP for Jarrow and Gateshead East, has raised three of her constituents' cases with high interest rates on their Plan 2 Student Finance loan repayments in Westminster Hall.
Interest on Plan 2 loans is charged at the rate of RPI inflation plus up to 3%, depending on how much a graduate earns.
It follows the Prime Minister’s official spokesman indicating that the Government may consider slashing interest rates and changing the repayment threshold on student loans.
During Prime Minister’s Questions (PMQs) on Wednesday, February 25, Prime Minister Sir Keir Starmer said that he will look at ways to make the student loans system fairer.
Ms Osborne has asked the Government to urgently take action to tackle the crippling debt trap that people are facing when they are leaving education.
She said: “I've recently been working on a case for my constituent Melissa - and following a post on my social media about her case, it caught a wave of people in similar situations and I have now been contacted by over 700 individuals all with similar horror stories about the levels of debt they have on plan 2.
“People like Lucy who left university with nearly £28,000 of debt to pay back and it is now standing at a huge £54,000.
“Or like Chloe who went straight into full time employment post education, immediately starting to pay off her student loans - despite that, she now owes £14,000 more than when she started.
“Education is a right - not a privilege. It is not okay that we are pricing people out of education.
“Quite frankly the amount of interest being charged every year is a scandal and a rip off.”
Melissa, Kate’s constituent, has stated that it “feels impossible” to make progress on paying off her student loan due to the constant rising interest every year.
She commented: “Despite making consistent monthly repayments, the amount I owe just goes up by thousands every year, the worry is having a real impact on my life and freezing the threshold means I will have less money in my bank every month, making it even harder to do things like get a mortgage, or get a car.
“It feels impossible to make progress and I feel completely scammed - how can it be right to change the terms and conditions after I have finished university.
“I want to thank Kate for raising this, it is a scam and it is hitting the least wealthy students and graduates the hardest.”
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