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Increase in student loan interest rate

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    • Thread Starter

    Please read this article about how the interest rate on student loans is calculated and how the rise calculated for September 2016 will affect repayments.

    In a nutshell:

    - In September 2016 the maximum interest rate will rise from the current 3.9% to 4.6%. The minimum rate (for those earning £21,000 or less) will increase from 0.9% to 1.6% - which represents an increase of 75%!

    - While studying and for students until the April after they have left their course, whether in work or not, interest will accrue at this new maximum rate of 4.6%.

    - Once you are in work, in order to repay just the interest, you will need to earn £28,115. If you earn below that, your debt will increase because your repayments will not cover the increase in interest.


    That's just terrible

    There will be good years and bad years for interest.
    • Thread Starter

    (Original post by Keyhofi)
    There will be good years and bad years for interest.
    Of course. But what most students don't realise is that the interest rate on their loan is calculated on the Retail Price Index, and not on the Bank Rate. We have had exceptional low levels of inflation in the last few years, so this has not started to bite yet, but as inflation comes back - as it will, inevitably - students will really notice the hike in their repayments.

    Just to illustrate the difference, the current Bank Rate stands at 0.5%. At the moment, banks are offering mortgage rates at 2.5%. That's considerably lower than the current student loan interest rate of 3.9%, even without thinking about the increase due in September!

    Why doesn't the National Union of Students lobby the government about this?
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