"An independent enquiry should be set up to stop children out of school being laden with more then thirty years of unfair debt." Jake Butler, an expert for money advice website , said the increase to student loan interest was “worse than expected” this year.“It really demonstrates that the interest on loans under the new system is far too high and should be reassessed,” he said.However, the website pointed out that those who started university after September 2012 do not start repaying their loan until they are earning more than £21,000 a year, adding: “Unless you start off with a graduate salary of higher than £30,000, it’s unlikely you will pay off your full loan and interest before it’s wiped after 30 years anyway.” The Department for Education defended the move, with a spokeswoman adding: “The Retail Price Index (RPI) has always been used for calculating interest on student loans."Student loans are not like commercial loans as they have more favourable terms, including repayments being linked to income and not to the amount borrowed.Last year there were around 400,000 people on universal credit and their UC payments were made without issue.
The rise in inflation following a post-Brexit slump in the value of the pound since last June means students could see interest rates rise by around a third, from 4.6 per cent up to 6.1 per cent.
"This is an inexcusable assault on the vulnerability of students with no alternative but to go along with the government’s student finance system.
"Immediate and urgent scrutiny is needed of student finance," she added.
The claimants will be hit because they are paid weekly and their income “will likely go over the universal credit limit”, officials say.
They will be able to reapply in January – but, it is feared, will be left without a payment from the Government over the Christmas and New Year period. But no, it’s actually what’s happening,” said one worried claimant on the Mumsnet website.
As a result, current students and a many graduates will see the interest rate on their student loan jump to more than 24 times the official Bank of England base rate of 0.25 per cent.