A senior minister today defended a meagre cut to crippling student loan interest rates, saying public cash was needed to pay benefits instead of helping graduates. Lucy Rigby cited funding for scrapping the two-child benefit limit when grilled over the government's 6 per cent cap on the rate paid on Plan B loans by tens of thousands of young adults.While the change means the rate is lower than it would have been under the previous system, critics have said it is still too high and will benefit well-off graduates more than those from poorer backgrounds. Appearing in front of MPs alongside Skills Minister Baroness Smith this afternoon, the Treasury Chief Secretary defended the cap brought in by Rachel Reeves in April.The Chancellor acted amid a national clamour for action, backed by Tory leader Kemi Badenoch, at the eye-watering repayments demanded of some graduates, many with no chance of paying off the loan entirely during their working life.Ms Rigby told the Treasury Committee this afternoon: 'We do have to bear in mind fairness to taxpayers as a whole… the majority of young people don't go to university.'She added: 'There is a host of things which we have been able to do (to help students), but politics is about choices and the Chancellor has chosen to prioritise a number of things including lifting the two-child benefit cap for example, funding free breakfast clubs, SEND reform.'She added that students would benefit from other changes the government had introduced, including more rights for renters and help with energy bills.The decision to lift the two-child limit on paying benefits to parents was made earlier this year after a major rebellion by Labour backbenchers.Ms Rigby's remarks also come days after it was revealed Work and Pensions Secretary Pat McFadden complained that party MPs were bombarding him with demands for new taxes to fund more handouts. Treasury Chief Secretary Lucy Rigby was grilled in front of the Treasury Committee over the Government's move in April to cap the interest rate paid on some loans at 6 per cent Appearing alongside Skills Minister Baroness Smith, Ms Rigby said: 'We do have to bear in mind fairness to taxpayers as a whole… the majority of young people don't go to university'The Government has also rejected calls to cut the welfare bill to fund a major boost in defence spending, for fear of another rebellion.Mrs Badenoch today demanded benefits curbs to help fund the military, condemning signals from the Chancellor that taxes will need to go up again instead.The Treasury has been playing hardball over how much money can be allocated to defence, and where it will come from.As well as a multi-billion pound shortfall in existing budgets, there are disagreements over how and when targets for increasing spending can be reached.The Government's room for manoeuvre is limited after a revolt last year torpedoed efforts to curb spiralling sickness benefits. Plan 2 student loans are those taken out for undergraduate courses and Postgraduate Certificates of Education since September 1, 2012 in Wales, and between September 1, 2012 and July 31, 2023 in England.Interest on these loans was paid at the rate of Retail Price Index inflation (RPI) from the March preceding the beginning of the academic year in September, plus up to 3 per cent extra depending on income.Before the cap the maximum was 6.2 per cent, but it would have gone up to 7.1 per cent in September due to a spike in inflation linked to the war between the US and Iran.