Is a lot of interest incurred from student loans?

Eloise 1987

I have recently discovered that you get charged interest on student loans? is the interest added monthly, yearly? what is the average interest rate?

If I graduated from Uni with £15,000 of debt, say 20 years later I don't pay back a single penny, what do you think the £15000 may rise to?

Reply 1

cl_steele

2

well if you leave it that long then you may aswell leave it another ten years and the loan will be wiped.

Reply 2

Elwyn

17

Interest rate is tiny.

Reply 3

Illusionary

19

Original post by Eloise 1987

I have recently discovered that you get charged interest on student loans? is the interest added monthly, yearly? what is the average interest rate?

If I graduated from Uni with £15,000 of debt, say 20 years later I don't pay back a single penny, what do you think the £15000 may rise to?

Interest accrues on student loans daily, but IIRC is added to your loan balance monthly. See here for details of interest rates: http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678642&_dad=portal&_schema=PORTAL (for those starting courses before this year).

Reply 4

Eloise 1987

OP

Original post by Illusionary

Interest accrues on student loans daily, but IIRC is added to your loan balance monthly. See here for details of interest rates: http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678642&_dad=portal&_schema=PORTAL (for those starting courses before this year).

So on a £15000 loan, what interest should I expect?

Reply 5

Illusionary

19

Original post by Eloise 1987

So on a £15000 loan, what interest should I expect?

Well, at 1.5% that starts off at £225 for a year, but interest is cumulative and I can't predict future interest rate changes.

Reply 6

DarkWhite

17

It's set out more clearly on direct.gov.uk:

•

while you're studying - rate of inflation plus 3 per cent

•

£21,000 or less - rate of inflation

•

£21,000 - 41,000 - varies between the rate of inflation and the rate of
inflation plus 3 per cent depending on your income

•

£41,000 or more - rate of inflation plus 3 per cent

http://www.direct.gov.uk/en/EducationAndLearning/UniversityAndHigherEducation/StudentFinance/Typesoffinance/DG_171539

Reply 7

Illusionary

19

Original post by DarkWhite

It's set out more clearly on direct.gov.uk:

•

while you're studying - rate of inflation plus 3 per cent

•

£21,000 or less - rate of inflation

•

£21,000 - 41,000 - varies between the rate of inflation and the rate of
inflation plus 3 per cent depending on your income

•

£41,000 or more - rate of inflation plus 3 per cent

http://www.direct.gov.uk/en/EducationAndLearning/UniversityAndHigherEducation/StudentFinance/Typesoffinance/DG_171539

Ah, yes - that's for new course from this year, I think? My explanation is for courses starting before this year.

Reply 8

DarkWhite

17

Original post by Illusionary

Ah, yes - that's for new course from this year, I think? My explanation is for courses starting before this year.

Previously it was some dodgy calculation which was something like Bank of England base rate or rate of inflation + 2%, whichever is higher at the end of the month, or tax year, or something; it was confusing!

Reply 9

S23a

15

Original post by Illusionary

Ah, yes - that's for new course from this year, I think? My explanation is for courses starting before this year.

I'm pretty sure that this was also put into place for all students with loans, regardless of when they started university. Can anyone prove otherwise?

The link further up on the thread is just a history of interest rates.

Reply 10

Illusionary

19

Original post by S23a

I'm pretty sure that this was also put into place for all students with loans, regardless of when they started university. Can anyone prove otherwise?

The link further up on the thread is just a history of interest rates.