UK’s student loan rate falls below 1%
A UK student loan repayment rate of 1.4% is below the target set by the government and the country is now “very much” in line with the US, the Bank of England has warned.
The bank also warned that it is “well within the realm of possibility” that the UK could “reinforce” the target.
However, the latest data shows that a large number of UK students are continuing to borrow and the average repayment rate remains below the 2% target, according to the Office for National Statistics (ONS).
A total of 1,082,800 UK students were taking out student loans in March, a rate of about one student loan borrower every 20 seconds.
However there were still nearly 1.5 million outstanding loans in the country, according the ONS, and some 6,000 borrowers were unable to repay their loans because they were not able to meet their repayments.
The government says it aims to increase the proportion of borrowers in the workforce to 80% by 2020.
The latest figures come amid renewed calls for the UK government to review the government’s decision to freeze the repayment rate on its student loans.
A group of former student borrowers and a group of charities have launched a legal challenge against the government.
The Universities UK group says that the government has breached its obligations to protect the financial interests of the vast majority of student borrowers.
The coalition government says the rate freeze was in place because it was “concerned about the high costs of student loans” and because it “did not believe it was possible to keep up with rising costs and the pace of change in the sector”.
The UK is one of a number of countries where student loan repayments are still capped at 3% per annum.
“There is a very real risk that, in the absence of any changes in policy, student loan debt will continue to escalate, further restricting the availability of opportunities for graduates and future graduates,” the group said in a statement. (Reuters)