Normally interest increases in line with inflation, but the current 9% rate would have seen student loan rates rise to 12% while the base rate is only 1.25%.

A rise in the rate of RPI due to global economic pressures meant student loan borrowers faced a 12% interest rate in September and the government has capped interest rates to a maximum of 7.3% to protect graduates.

Confirmation on interest rates is usually made in August, but the government has taken unprecedented steps to bring the decision forward, based on predicted rates, to provide reassurance for student loan borrowers on Plan 2 (undergraduate) and Plan 3 (Postgraduate) loans.