Millions of graduates will now face paying interest on their student loans again as new interest rates came into effect yesterday.
Payments to the Student Loans Company include a 1.5 per cent interest rate from September 1st for those who took out a loan after 1998, and 4.4 per cent if the loan was taken out before 1998.
Young Socialists National Secretary Joshua Ogunleye called for loans and tuition fees to be scrapped.
He told News Line: ‘The interest rate on student loans going up is terrible for young people, it’s starting them out at the beginning of their lives with huge debts that they may never be free from.
‘The capitalist system sees young people as just another source of exploitation and another means to make profit.
‘The leadership of the National Union of Students (NUS) needs to take action to oppose tuition fees and graduate taxes and should demand the scrapping of all student debt.
‘If they are not ready to fight for students they should be kicked out and replaced with a leadership of young people willing to fight for a future under socialism.
‘This is why the Young Socialists is organising a march across the UK to build a new leadership.
‘We will be marching against tuition fees and youth unemployment and we invite all students and working class youth to join us.’
Graduates have enjoyed interest-free loans for the last year owing to the way the rates are calculated.
The new rates replace ones of zero per cent on the post-1998 loans and -0.4 per cent on the pre-1998 ones which have applied during the last year.
Interest on student loans is based on either the Retail Prices Index (RPI) measure of inflation in March or the highest base rate charged by a group of banks plus one per cent, depending on which is lower.
Because RPI was 4.4 per cent in March, the rate for the coming year will be 0.5 per cent plus one per cent, giving a rate of 1.5 per cent.
The rate could increase during the year if there is a change to the Bank of England Bank rate, which is likely to be mirrored by the banks.
About 3.3 million people have a student loan taken out after 1998, while 355,600 have one taken out before 1998.
Commenting on the rise, NUS President Aaron Porter said: ‘That many students will be hit by hundreds of pounds being added to their debt this year at a time when youth unemployment is at nearly one million is further demonstration that the current system of funding is broken.
‘The government must do away with the sticker prices placed by universities on degrees that treat education like a product to be bought.
‘When the government reviews the system of funding in the Autumn the amount a graduate contributes must reflect their real earnings and not maintain a situation where the debt they have taken on to pay for their education continues to rise as their earnings decrease.’
University and College Union (UCU) general secretary, Sally Hunt, said: ‘The benefits of a university education can never be underestimated.
‘Sadly what is often overplayed is the graduate premium and the student loan repayment rate.
‘Thousands of graduates will perhaps be surprised to find how much money is disappearing out of their wage packets and how little impact this is actually having on their debt.’