Think Tank Calls For Increase In Student Loan Interest

Fri, 11 Dec 2009

The interest rate on student loans should be increased to help fund a new national scheme, according to London-based think tank Demos.

In a new report, the independent research institute said it believes the student loan rate should be increased to 2.5 per cent to generate money for a national civic service, whereby "civic corps" carry out community service tasks.

Demos estimates that £450 million of investment would be needed to make the scheme a success, which in return would generate around £1 billion in social and economic returns.

Commenting on the plans, UK Education Secretary David Lammy said: "I have long campaigned for a national civic service and I hope the recommendations from this excellent report find their way in to the next Labour manifesto."

However, the University and College Union (UCU), the largest trade union for academic-related staff working in higher education, has expressed concerns over the proposals.
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