Source · Select Committees · Treasury Committee
Recommendation 8
8
Considered in isolation, an interest rate much higher than inflation seems unfair, while an interest...
Conclusion
Considered in isolation, an interest rate much higher than inflation seems unfair, while an interest rate pegged to inflation that maintains the real- terms cost of a loan might seem fairer. If earnings fail to keep up with inflation, however, graduates become less well-off relative to their loan balance, as happened during the spike in inflation in 2022 and 2023. (Conclusion, Paragraph 42)