MP wins fight over graduate interest on old student loans

South Lakes MP Tim Farron has welcomed the news that Vince Cable has agreed not to hit existing graduates with student loan interest.

Tim, who voted against the rise in fees of up to £9,000, was recently contacted by local graduates who were concerned that a government-commissioned study, conducted by investment bank Rothschild, included an option to increase interest rates for 3.6 million borrowers who took out student loans over the past 15 years. Tim has lobbied the Department of Business, Innovation and Skills and asked them to rule out this idea and send out a strong statement.

Over 12,000 people signed a petition run by campaign group 38 degrees asking the government not to proceed with the plans.

Mr Cable said today: "I have ruled out categorically changing the terms of interest rates charged to graduates with existing student loans taken out before 2012. The Rothschild study which was completed in 2011, was a feasibility study which looked principally at how to sell the student loan book. Work on the feasibility of selling the outstanding student debt continues.

"However the study also contained a proposal which suggested a change in interest rates charged to existing students - that proposal was comprehensively dismissed two years ago and will not be taken forward by this government."

Tim added: "Local graduates were incredibly worried that adding even more interest to a debt would be unfair. I have lobbied Vince and ministers incredibly hard on this and I am glad they have listened. I will keep making the case for graduates on the new system and I will fight to make sure their repayment system is as fair as it can be."