JEREMY Miles MS, Minister for Education and Welsh Language has announced that Welsh student loans have been capped for three months at 6.3%.
In a statement the Minister said:
“I made a statement on 13 June 2022 to confirm the intention to cap the interest rate charged to Welsh students on certain loans from September 2022 at 7.3% for a period of 12 months. Following further review, I can state that the rate will be capped at a lower rate of 6.3% for three months from 1 September 2022. This cap has also been announced by the UK Government for English students. The Welsh Government will continue to protect students from high interest rates on their loans, rates which are a result of high levels of inflation.
The rate of inflation which determines the interest charged on certain loans reached 9% in the year to March 2022. Interest rates would rise to up to 12% from September 2022 for a period of time before rates are capped. The Welsh Government must ensure that rates do not exceed the prevailing market rate and has taken action three times in the last year to cap the rate on loans and protect students.
The rate on loans taken out by undergraduate students since 2012, and by postgraduate students, will be capped at 6.3% between 1 September 2022 and 30 November 2022. Further rate caps may be applied if the prevailing market rate continues to be below student loan interest rates after that date.
Changes to interest rates do not change monthly student loan repayments, which are charged as a fixed proportion of income. Loan repayments are income contingent. Students repay their loan only if they earn above a threshold, and remaining debts are written off after thirty years.
Living costs should never be a barrier to studying at university, which is why the Welsh Government provides the most generous living costs grants in the UK. Welsh students have less to repay on average than their English peers. The Welsh Government also provides a debt write-off of up to £1,500 for each borrower entering repayment, a scheme unique in the UK.”