GRADUATES face sinking up to £16,000 deeper into debt because of the way the government “cherry-picks” the inflation rate it uses to set the interest on student loans.

New House of Commons Library analysis shows the costs to students of the government using the higher RPI rate of inflation for loans, even as it uses CPI for benefits.

RPI, which includes housing costs, is forecast to be 1 per cent higher than CPI over the next five years.

The government stopped using RPI when increasing the value of public-sector pensions in 2011, leaving workers £650 a year worse off.

“It’s not enough that they’ve saddled graduates with an average of £50,000 in debt. They’re now charging an additional £16,000 on their loans,” shadow chief secretary to the Treasury Peter Dowd said.

“The government is cherry-picking inflation measures to maximise profits … simultaneously robbing the old and the young. They need to end this rip-off and revert to the CPI.

“The next Labour government will abolish tuition fees to ensure education is a right for all, not a privilege for a few.”

The House of Lords economic committee has launched an inquiry into whether the use of RPI should be ditched, while Bank of England governor Mark Carney said it “has no merit” and called for its withdrawal.

The Office of National Statistics also said RPI was a “very poor” measure with “serious shortcomings.”

National Union of Students vice-president for higher education Amatey Doku told the Morning Star: “The whole student support system is flawed and needs urgent change, but as long as loans are a feature, RPI must not be used as the measure for inflation.”

National Campaign Against Fees and Cuts organiser Vijay Jackson said that it was “thoroughly unsurprising” that the government was ripping-off students by “fiddling” the interest.

He added: “This is no different to their refusal to raise the repayment threshold and the creeping increases in the tuition fees.

“This is only one part of the overall drive to marketise higher education and complete the aim of making a degree into a commodity, rather than a public good provided for the benefit of all society.”

Mr Jackson welcomed Labour’s pledge to abolish tuition fees but urged the introduction of universal living grants to ensure that education was “truly free, liberated and accessible to all.”