"Already graduates were grappling under heavy debt loads linked to student loan repayment terms and now the unfairness seems even more stark given ministers have changed the repayment goalposts for other contracts. From April 2026, payments under the Renewables Obligation will be uprated using CPI, a lower, more modern measure of inflation. This will help contain the cost of the scheme for households. Yet student loans under Plan 5 remain tied to RPI, leaving borrowers paying higher interest on debts that may take decades to repay."
"Since RPI typically exceeds the Consumer Prices Index including Housing (CPIH) by around 1 percentage point, graduates will pay more interest than they would under calculations based on CPI. This discrepancy results in higher interest costs for graduates, which hampers their ability to save, invest, and build financial resilience over time."
Starting April 2026, the Renewables Obligation subsidy scheme will transition from RPI to CPI indexation, reducing long-term energy consumer costs. However, Plan 5 student loans will continue using RPI, currently at 3.2% for 2025-26. Since RPI typically exceeds CPI by approximately one percentage point, graduates face higher interest costs than they would under CPI calculations. This policy discrepancy means the government is lowering inflation measures for subsidy payments while maintaining higher measures for student loan interest. Experts identify this as unfair treatment, as graduates already managing substantial debt loads now face even steeper interest costs that impede their ability to save, invest, and build long-term financial security.
Read at London Business News | Londonlovesbusiness.com
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