Today it was announced* that as of September, both current students and a significant number of graduates could see interest on student loans rise from 4.5% to up to 12%.

The surge in interest will mean rates will be the highest ever, since tuition fees were first raised to £9,000, back in 2012.

James Andrews, Senior Personal Finance Editor for money.co.uk said: “While the planned increase in student loan interest rates will come as a blow to many, there is some hope for students.

“There is a chance that the Government will cap the rate of interest based on their Prevailing Market Rate calculation, however this won’t be decided until August. Until then, it’s probably best to assume the interest rate hike will come into effect as planned.

“If you’re a graduate paying off your student loan, you need to take a look at how the upcoming change will affect the amount of interest that you incur.

“The increase is expected to be from 4.5% to 12% for high earners, with lower earners being hit by a smaller, but still significant increase of up to 9%.

“For an average graduate with a debt of £50,000, this could mean their debt rises by between £2,000-£3,000 over a six month period, once the new rates come into effect.

“Overall, the increase in interest rates means that more graduates will be paying back for longer. However, despite the bleak news, potential new students shouldn’t be put off applying for student finance.

“It’s also vital to remember that the interest rate on the loan does not in any way affect how much is deducted from your salary each month. What it will mean is fewer people pay off their debt before the 30-year expiry date – meaning they will pay for longer before the debt is cleared.

“Although the scope of the interest rates and repayments have changed significantly since the system was first introduced, a student loan is still the simplest and easiest way of funding your university education.

“Remember, the loan itself does not affect your credit rating or history, and you only start repaying the loan when you hit a certain earnings threshold. If you drop below the earning threshold, you’ll stop paying with no penalties.

“If you’re a current student and want to get your finances in order, check our the handy money.co.uk student guides here: https://www.money.co.uk/guides/student”