Using the retail prices index to set student loan repayments will cost graduates up to £5,000 more, the TUC has warned today. The government's refusal to change the interest rate on student loans from RPI to the consumer prices index - despite having already done so for state and public sector pensions, tax thresholds and key benefits - will leave students thousands of pounds deeper in debt.

Prospect has welcomed the in-depth analysis by the TUC, published on its website. It shows that a graduate with a student loan of £25,000, and on the average graduate salary, will pay an extra £4,800 and take two years longer to pay off their student loan if the debt is uprated by RPI rather than CPI.

The use of RPI will be even more costly for students yet to go to university, as the Education Bill currently going through parliament includes a clause allowing ministers to charge up to commercial loan rates (RPI plus 3%) for future student loans.

Prospect deputy general secretary Dai Hudd welcomed the research, saying: "Prospect made the case to the government and TUC several months ago that RPI is not an appropriate measure for charging interest on student loans. It's unfair that students should be penalised in this way.

"Yet at the same time, where it pays out rather than receives the money, the government has switched to CPI on benefits, pensions and taxation.

"It will become more expensive for students to go to university, with tuition fees set to treble at the same time as the cost of loans increases."

Dai Hudd will be giving an update on the union's campaigns against cuts and the student loans position at Prospect's Young Professionals Network conference on 19 April at Nottingham University. Members aged 30 and under who are interested in attending should email [email protected]