Students paying eye-watering rates of interest on their student loans could gain a reprieve as the Government faces possible legal action.

After taking advice, a mother of two, whose twin daughters both went to university, has written to education secretary Damian Hinds challenging the official interest rate. She suggests the current rates could be a breach of the law.

The highest rate, which is linked to the retail prices index (RPI), a popular but discredited measure of inflation, is set to rise from 6.1pc to 6.3pc in September. Fiona Kirton cites the Teaching and Higher Education Act 1998 when making her case, reports the Times.

According to pro-bono legal advice provided by law firm Leigh Day, the act stipulates that the rate paid by former students should be “lower or no higher” than the commercial market rate. Current benchmarks suggest this is 3.81pc.

In her letter Ms Kirton points out that the current rate is double that of car finance and says the system impacts the poorest students the most.

A spokesman for the Department for Education insisted that any rate rise would have no impact on monthly repayments and that the rate of 6.1pc does comply with the law.