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Student Finance Interest-Rates. Am I Right?

Hello, could you please check my understanding of how interest rates work on student loans?

What I feel I understand:

"The rates themselves are calculated by including the rate of inflation (also known as Retail Price Index- RPI), which measures how much the cost of living changes in the UK. 3% is then added to the RPI value, giving the rate of interest.

The current interest rate for 2014/15 is 5.5%, which is huge. Not all people can pay off their loans, some people find it difficult to even pay the interest off. For example, if you had to pay £9,000 per year: you would have another £495 pounds to pay each year at the current rate.

The rate of interest changes each year, as each year would have a new RPI rate. Interest is added as soon as the loans are taken out.

However, the amount of interest you can pay depends on your income;

£21,000 or less = only pay inflation.

£21,000 to £41,000 = pay inflation plus up to 3%.

Over £41,000 = pay inflation plus 3%."


Does this sound right?

Much appreciated.
(edited 9 years ago)
Reply 1
Avatar for Klix88
Klix88
17
Check the details with the SLC:
http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678755&_dad=portal&_schema=PORTAL
http://www.slc.co.uk/services/interest-rates.aspx

The illustrations on this page give example monthly repayments based on earnings:
http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678784&_dad=portal&_schema=PORTAL

If you earn £30,000pa, you'll be repaying £67 a month. Not sure I understand how your suggested £9000 a year repayment would ever happen.
(edited 9 years ago)
Reply 2
Avatar for Davalla
Davalla
OP
20
Original post by Klix88
Check the details with the SLC:
http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678755&_dad=portal&_schema=PORTAL
http://www.slc.co.uk/services/interest-rates.aspx

The illustrations on this page give example monthly repayments based on earnings:
http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,6678784&_dad=portal&_schema=PORTAL

If you earn £30,000pa, you'll be repaying £67 a month. Not sure I understand how your suggested £9000 a year repayment would ever happen.


Yeah, I used those sources when trying to configure what I've said above, I just wanted to make sure that I understood it properly.

The example I gave was referring to the interest that would be earned on a £9,000 loan, not how it would be re-payed, by the way. [There's a pure focus on interest here, not repayments]
(edited 9 years ago)

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