Students' loan repayments may be eased

Graduates may find that their student-loan repayments ease slightly following the effects of the credit crunch.

Financial charity UNIAID has said that students could actually benefit from the current economic instability.

According to Alistair Lomax, the Executive Director of UNIAID, the interest rate on student loans tracks the Bank of England's base rate and as this is currently falling, graduates will pay less interest on their loans.

The base rate was dropped to 5% by the Bank of England's monetary policy committee last week, and Ross Walker, an economist at Royal Bank of Scotland, predicted that the interest rate could be reduced to 4.5% by the end of the year.

Mr Lomax stated: 'Student finance support arrangements are pretty insulated from the rest of the economy.'

However, UNIAID warned that university fees could increase to £7,000 a year by 2009.