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Students to pay 0% interest on loans
More than 2.5 million students will pay zero per cent interest on their loans from September, the government announced this week.
This news dashes hopes that students would effectively 'earn money' on their loans, which were raised after the Retail Prices Index (RPI) dropped to -0.4 per cent last month.
On making its decision, the Student Loans Company (SLC) said that the loans are already subsidised by the government and it would be difficult to justify using taxpayers' money to reduce them.
The decision does mean that graduates will be able to pay off their loans more quickly, but monthly payment levels will remain the same.
In a statement, the SLC said: "Borrowers repay nine per cent of their earnings over the income threshold of £15,000. Whatever the rate of interest is, that monthly repayment will not change."
RPI became negative in April for the first time in 50 years according to figures from the Office of National Statistics.
This means that customers paid less for items last month than they did a year ago.