Maintenance/Tuition fee LOAN interest? Watch

Intelligentsia
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#1
Report Thread starter 12 years ago
#1
Hi,
I believe the general hype around these loans is that they are interest free? I seem to recall reading in the fine print that there is, in actual fact, interest payable on these loans!?! Something about interesting growing in line with inflation? Can someone confirm or explain what the deal is with interest on these loans? (Both maintenance and tuition fee). Thanks very much.

ps: tried searching TSR, but no luck so far.
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sunscreen
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#2
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it just means basically what you pay back will be relative to what you borrowed...

like in yeee olden days a penny was worth more than what a penny is worth now... so you'd have to pay MORE than a penny... lol if that makes sense...
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Intelligentsia
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No I'm afraid it doesn't.

I actually think it's extremely concerning that we're made to borrow so much without realizing the implications of inflation and what have you, and I swear I can quote various government sources claiming it's "interest free". Which is a rather misleading term for an average A level student having done nothing economics related with absolutely no experience... I think that's really very wrong. They even shove it all in the fine print without providing proper explanations. I know there's no excuses for ignorance, but they really should make it more transparent!!!!
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Dez
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#4
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It's not interest free, however the interest rate is really, really low; lower than the base rate. It's hard to explain the concepts of inflation to the clueless (no offence), but you won't really be paying back any more than you borrowed.
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Greenmile
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#5
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The interest is in line with inflation - about 3%.

The interest applies from when you take the loan, not when you finish your course.

All the information should be in the blue book that came in the pack with your application for finance. I've forgotten what its called, but if you don't have one, you can contact your LEA for one, or may be able to view it in pdf format from the student finance direct website.
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Intelligentsia
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#6
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Ah ok thanks, so is that the same infamous "inflation rate" that the BoE announces every quarter or whatever and the businesses make a huge fuss out of? Any idea what it is right now.. 3.x% I believe?
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Dez
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I think it's around 2.5% or something. Labour's target is 2%.
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Intelligentsia
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#8
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So if I shove my extra unneeded loan into an ISA at 5.x% I can legally make profit on the loan? I keep reading its "illegal" and all that. Of course the loan would be paid into my regular student account, but once it's mine I can do whatever I want with it (or a portion of it anyway) right.
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BovineBeast
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(Original post by Intelligentsia)
No I'm afraid it doesn't.

I actually think it's extremely concerning that we're made to borrow so much without realizing the implications of inflation and what have you, and I swear I can quote various government sources claiming it's "interest free". Which is a rather misleading term for an average A level student having done nothing economics related with absolutely no experience... I think that's really very wrong. They even shove it all in the fine print without providing proper explanations. I know there's no excuses for ignorance, but they really should make it more transparent!!!!
Well, look at it this way - in terms of the actual number you pay back, it will be more (unless the economy deflates). But in terms of the value you pay back, it'll be the same, because prices and wages will change in the meantime.
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sunscreen
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(Original post by BovineBeast)
Well, look at it this way - in terms of the actual number you pay back, it will be more (unless the economy deflates). But in terms of the value you pay back, it'll be the same, because prices and wages will change in the meantime.
lol like what i said...
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Greenmile
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(Original post by Intelligentsia)
So if I shove my extra unneeded loan into an ISA at 5.x% I can legally make profit on the loan? I keep reading its "illegal" and all that. Of course the loan would be paid into my regular student account, but once it's mine I can do whatever I want with it (or a portion of it anyway) right.
I know loads of people that have done this.
None of them have been arrested yet!!

Even if it was illegal, how are they going to know?
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Dez
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It is breaching the SLC's regulations, but as Greenmile said, you're unlikely to be caught for doing it.
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Intelligentsia
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#13
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(Original post by Dez)
It is breaching the SLC's regulations, but as Greenmile said, you're unlikely to be caught for doing it.
What regulation specifically... something obscure in the fine print? But yeah, I would definitely consider it.
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Dez
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#14
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Yeah, it's somewhere in the loan agreement that you'll only use it for your studies or something. I don't know the details, all I know is they technically forbid it.
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