The new Education Secretary has signalled plans to overhaul the student loan system to cut graduates’ cost of living – opening the door to another multi-billion-pound spending commitment.
In an interview on Monday, Lucy Powell indicated ministers were considering changes to both the repayment threshold and the interest rate on Plan 2 loans.
Interest is charged on plan two loans at the rate of Retail Prices Index (RPI) inflation and up to 3 per cent depending on how much a graduate earns, with repayments starting when they earn a salary of £29,385.