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<p>The government has not yet decided on what interest rates will be applied to student
loans from September 2022. The department will be considering all options over the
coming months and will confirm in due course the rates to apply from 1 September.</p><p>Changes
to student loan interest rates will not increase monthly student loan repayments.
Monthly repayments are calculated as a fixed percentage of earnings above the relevant
repayment threshold and do not change based on interest rates or the amount borrowed.
If income is below the relevant repayment threshold, or a borrower is not earning,
then they do not have to make repayments at all. Any outstanding debt, including interest
accrued, is written off after the loan term ends (or in case of death or disability)
at no detriment to the borrower. There are no commercial loans that offer this level
of protection.</p><p>The government, by law, must cap maximum student loan rates to
ensure the interest rate charged on the loan is in line with market rates for comparable
unsecured personal loans. The government monitors student loan rates against the Bank
of England’s data series for the effective interest rates on new and existing unsecured
personal loans.</p><p>We announced in February that we will be reducing interest rates
for new borrowers and so, from academic year 2023/24, new graduates will not, in real
terms, repay more than they borrow. Alongside our wider reforms, this will help to
make sure that students from all walks of life can continue to receive the highest-quality
education from our world-leading HE sector.</p>
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