LABOUR attacked Education Secretary Damian Hinds today over his “staggering” claim that there is no problem with the government’s linking of student loan interest rates to the Retail Price Index (RPI) measure of inflation.
Mr Hinds told BBC Radio 4’s Today programme that there is no reason to switch to using the lower Consumer Price Index (CPI) rate.
His comments came as students across the country were picking up their A-level results.
RPI is used by the government to set interest rates and it will push student loans for university tuition fees up to 6.3 per cent from 3 per cent this autumn.
This is “not how our education system should operate,” said shadow chief secretary to the Treasury Peter Dowd.
“Using a widely criticised measure such as RPI to apply interest to student loans has always been about ramping up the costs to graduates and maximising government profits,” he said.
A recent Labour analysis found that graduates face up to £16,000 more student debt because of the government’s use of the RPI than if the linkage was to the CPI .
“Clearly the Tories, who tripled university fees, have no desire to ease the burden on students facing mountains of debt,” Mr Dowd added.
“Shamefully, for the government, higher education is about profit, not the public good.”
The Treasury select committee has previously called for student loans to be linked to the CPI, which is a percentage point below the RPI, and the higher rate has been criticised as “flawed” by the Office of National Statistics.
New Department for Education forecasts show that student loans in England are likely to hit £15 billion this year, partly due to the axing of maintenance grants and nursing bursaries.
They also show student loan outlays reaching £20 billion a year by 2022-23, despite a predicted fall in student numbers.
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