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Thinktank warns Tories not to cut interest rates on student loans

Bright Blue says measure being considered in Downing St to woo younger voters would only benefit better off graduates

The full article can be found here – https://www.theguardian.com/education/2017/sep/10/cutting-student-loans-interest-rate-would-only-benefit-better-off-says-tory-thinktank

Extracts – A prominent Conservative thinktank is warning Philip Hammond against giving high-paid graduates a handout by cutting the interest rates on student loans in a bid to win over younger voters.

Cutting the interest rates on outstanding student debt is one measure under consideration in Downing Street, but the thinktank Bright Blue, which counts more than 100 Conservative MPs among its backers, said that would only benefit the better off.

Ryan Shorthouse, the thinktank’s chief executive, said:

“The Conservative government needs to and should make a big offer to young people. But reducing tuition fees or reducing the interest rate on student loans would only benefit high-paid graduates.”

Instead, he called for the government to raise the earnings threshold at which graduates start to repay their loans – currently set at £21,000 a year, but due to be frozen until 2020.

“This would mean all young people repaying student loans would pay a smaller amount from their salaries each month. It would effectively be a tax cut for
Research by the Institute for Fiscal Studies suggests three-quarters of graduates will not pay off their loans in full, even if they continue making payments into their 50s.”

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