According to House of Commons Library analysis, the debt is higher because the government uses the retail price index inflation measure to calculate interest on the loans, rather than the consumer price index.
In April, it emerged that graduates will face a 6.3 per cent hike in the rate applied to their loan from this autumn, due to an increase in inflation.
“The Conservatives are rigging interest rates to ramp up costs for students. It’s not enough that they’ve saddled graduates with an average of £50,000 in debt, they’re now charging an additional £16,000 on their loans,” said Peter Dowd MP, Labour’s shadow chief secretary to the Treasury.
“The government is cherry-picking inflation measures to maximise profits. They’ve used one measure to cut workers’ pensions and another to drive up student debt, simultaneously robbing the old and the young. They need to end this rip off and revert to the consumer price index.
Labour’s warning comes weeks after the Treasury Committee chair, Nicky Morgan, who is also a former Tory education secretary, criticised the government for its “absurd” use of the “flawed” RPI measure to calculate interest on student debt.
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