Graduates paying off their student loans are set to see interest rates soar this year, with the Institute for Fiscal Studies warning that students who took out a loan after 2012 are in for a "rollercoaster ride".
Based on the current Retail Price Index (RPI) inflation rates, the changes will see the maximum interest rate on loans rise from 4.5 per cent to an “eye-watering” 12 per cent for half a year for the highest earners - those earning £49,130 or more - while interest rates for low earners will rise from 1.5 per cent to 9 per cent, the IFS said.
This means that a high-earning recent graduate with a typical loan balance of £50,000 would incur £3,000 in interest over six months, a higher amount than a graduate earning three times the median salary for recent graduates would usually pay.
