Liverpool’s university graduates will soon be paying “eye watering” levels of interest on their student debt, according to a leading economic body.
The Institute for Fiscal Studies (IFS) said students were in for a “rollercoaster ride” in the coming months.
Interest rates for those earning £27,295 or less will increase from 1.5% to 9%. Former students earning £49,150 or more will see their rates rise from 4.5% to 12%.
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Interest rates on student fees are linked to Retail Price Inflation (RPI) which was 1.5% between March 2020 and March 2021. Today’s RPI inflation rate is 9% - six times higher than it was last year, according to the IFS.
A cap on the interest comes into force in March next year. This means young people starting courses in September 2023 will not be affected.
A 2% rise could see more than £1,000 being added to a typical graduate's debt, according to Save the Student, an advice website for young people.
Dr Gareth Nye, a former University of Liverpool student, told the ECHO: “My degree has directly led to my career and so going to University was 100% worth it but I see the frustrations students have felt during covid.
“What I currently pay back as it is barely covers the interest they apply and so increasing interest rates just mean realistically I'm never paying off the student loan debt.”
Hillary Gyebi-Ababio, NUS Vice-President for Higher Education, said: “These figures are brutal. Increasing the maximum interest rate on student loans to 12% will deter thousands of students from going to university.
“Education is a right for all, not a product that can be bought and sold for individual gain. The Government must immediately commit to reversing these changes.”
The University of Liverpool and John Moores University have not commented.
