Kemi Badenoch has pledged to cut the amount of interest paid on some student loans amid widespread concerns over costs.
The Tories have promised to limit the rate on Plan B loans to the retail price index (RPI) in a move that will heap further pressure on the Treasury.
Following Chancellor Rachel Reeves’ November budget, the salary threshold at which repayments kick in under the system will be frozen at £29,385 for three years, leading to many having to pay more.
Interest on Plan 2 loans is charged at the rate of RPI inflation plus up to 3%, depending on how much a graduate earns.
The Conservative leader has announced plans to restrict this to RPI only, which the Tories argue would help higher numbers of graduates pay off their debt.
Ms Reeves has suggested the Government will be able to cut repayments on student loans by bringing down inflation, after a backlash to last November’s budget announcement.
She said earlier this month: “By getting inflation down, we can also reduce the interest on student loans and I think that will make a big difference in making that more affordable.”
Campaigners have accused the Treasury of acting like a loan shark, while Labour’s deputy leader, Lucy Powell, described existing interest rates on Plan B loans as egregious and suggested the burden was unfair.
The Conservatives want to cut the number of university entrants by 100,000, which they say would save the Government £3.6 billion, and fund the same number of extra apprenticeships for 18 to 21-year-olds, as part of a “new deal for young people”, the Sunday Times reported.
Young UK citizens starting their first full-time job would also see the first £5,000 of national insurance they pay put into a personal savings account, which could be used to buy a home.
Writing for the Telegraph, Mrs Badenoch said: “I am horrified at what graduates today are dealing with, and this is one of the reasons millions of young people feel they’ve been stitched up.
“Plan 2 student loans, the system most people who started university from 2012 to 2023 are on, increasingly feel like a scam.”
She added: “If we want a country that rewards work, builds skill, and restores pride in practical achievement, we have to stop looking down on the very training routes that build the country.”
The Treasury has been contacted for comment.
Source: UK Politics - www.independent.co.uk
