Wales to cap student loan interest rate at 7.3%

Interest rates for student loans will be capped at 7.3% in Wales from September, the Welsh government has said.

It had been estimated that interest on student loans could reach 12% from September because of inflation.

Currently students pay 4.5% on loans taken out after September 2012.

It follows a similar decision taken by the UK government in England. The Welsh government said it would protect students from high interest rates.

The interest rate paid by loans taken out from 2012 is made up of the retail price index (RPI) rate of inflation, plus up to an additional 3%.

But with RPI reaching 9% in the year to March 2022, interest rates could have risen to 12% from September.

The rate cap will last for 12 months.

Education Minister Jeremy Miles said: "The Welsh government will continue to protect students from high interest rates on their loans, rates which are a result of high levels of inflation."