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How much interest on student loans??? watch

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    Hi all,
    Well I recently received a letter outlining my total uni debt, and wtf, I didn't know they charge interest (or at least so much of it!) on top!? For example, from the 4 months April to August this year, they charged ~£200

    Does everyone else know about this as I thought the 6k debt per annum was enough on it's own!
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    I have been wondering who else got this letter; I had one too a few weeks ago, I took it to Uni to show my uni mates and they were like ''I aint had that''. Joke is I have been charged £64 interest so far and it continues each month until I finish Uni in July 2010. . .I thought interest kicked in after we had finished uni (not whilst we are still at uni) . . . .hmmmmmmmmmm!
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    Yep I'm with you on this Dancingballerina, I too thought it kicked in after we finished. Not good. Surely there is some sort of law about this? Nowhere was it stated to me that interest would be charged.

    It also doesn't seem to make sense that they charge interest while we are in full time education?
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    So has anyone else had this letter and did you know interest is charged during the course?

    Thanks
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    I worked it out to be about 4.7% per year charged monthly. I feel a bit cheated as I really think i was led to believe it would be much lower than that, enough to be practically interest free. My bank account doesnt even give me 4.7% (more like 1%) interest on credit (yeah, i should get a new bank account, but 4.7% on a current account with a debit card is prob impossible)
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    4.8%
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    It does say that you will be charged interest on the loan from the moment you take it out. At least it did on the literature I read about it. This year it's 3.8%. I'm not worrying about mine. It has no impact on your credit rating, and is income-dependent unlike any other loan.
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    If you earn over about £15k per year then about 5% is deducted from your salary. It goes towards paying off your loan. I don't think you should be charged interest on your loan though...




    Btw, i could be wrong with this info. I've only ever done one set of accounts for a person who has a student loan...
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    i dont really care about the credit rating, ive taken out £9000 for two years (tuition fees etc) and its charging me £35 a month!!!
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    The rate of interest charged is set annually, to be equal to the prevailing rate of inflation, so you pay back the same amount as you borrowed in real terms. Unfortunately, that rate was rather high last year, but at least it's likely to fall for future years.
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    http://www.slc.co.uk/statistics/facts_figures.html
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    (Original post by Keith_Dave)
    If you earn over about £15k per year then about 5% is deducted from your salary. It goes towards paying off your loan. I don't think you should be charged interest on your loan though...
    You'll pay 9% on what you earn over £15,000. So if you earn £20,000, you'll get charged 9% on £5,000.

    Of course interest should be charged. It's a loan.
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    (Original post by TheOneWho)
    You'll pay 9% on what you earn over £15,000. So if you earn £20,000, you'll get charged 9% on £5,000.

    Of course interest should be charged. It's a loan.

    Ah that's what it is. I do apologise for posting incorrecting info, looks like my person was an exception because they didn't pay a penny of interest...



    Again, Sorry. :o:
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    The interest you are being charged is set at the rate of inflation so if inflation is 5.5% they charge you 5.5% interest on your loan. It is calculated monthly, and when the rate of inflation changes, they change the calculation for that month. For example, the ideal rate of inflation is about 2% (I think). This year just passed its peaked as high as 5.5%. It has now dropped to 4%. So the SLC didn't even think they would be charging that much interest as it is dependent on the economy. The good news is is they are trying ot keep the rate of inflation down to give the economy a kickstart.

    By charging interest on your loan at the rate of inflation, it means you are only paying back in real terms what you borrowed. Its just the same reason why tuition fees go up each year. They started at £3000, the following year £3070, this year £3145 - they are going up at the average rate of inflation for the previous year.

    So if you borrow £18k, and the average rate of inflation over those three years is 4% you will be paying back roughly in real terms what you borrowed as your salary should go up at the rate of inflation plus a percent or two each year.
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    What I don't understand is how everyone borrows money with a student loan, and then is surprised when they get interest charged on it or whatever? I mean if you enter a contract with something isn't it a good idea to read it thorugh and understand it first???

    Most students just don't have a clue about any of it, they just fill in the form and send it off and as long as they get money they're fine, until they realise they're being charged interest!!!

    You can save so so so much money by reading things, looking into different options etc instead of just going along with it all. I'm not saying the student loan is a bad thing, for goodness sake they only charge you the rate of inflation whereas most loans are at least 8 - 12 % at their minimum.

    Reading that small print actually lets you know what you'r in for, then you wont get any surprises....
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    i think what catches most people out is when they say you only pay back what you borrow but they dont get the idea that this means a different amount because of inflation...yes the rate has gone down this year, it says on that statement
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    (Original post by kineticz)
    Hi all,
    Well I recently received a letter outlining my total uni debt, and wtf, I didn't know they charge interest (or at least so much of it!) on top!? For example, from the 4 months April to August this year, they charged ~£200

    Does everyone else know about this as I thought the 6k debt per annum was enough on it's own!
    Am I correct in thinking you were charged £200 interest from April to August this year? If so, is it me or does that seem a little much for 4 months? That just puzzled me a little as I believe mine is something considerably less than that thus far..wonder how that works out!
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    ^^^ That is correct
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    It's 4.8% and it starts as soon as you start your course.

    What's also sneaky is (from what I've been told) if you pay it off in a lump sum (or part of), they still charge you interest on that sum from the date you paid it off to the end of the financial year.
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    (Original post by apotoftea)
    What's also sneaky is (from what I've been told) if you pay it off in a lump sum (or part of), they still charge you interest on that sum from the date you paid it off to the end of the financial year.
    Not true, in my experience - I paid mine off as a lump sum once I'd graduated, and it ended there, not in April. If you've got a source for what you say, I'd be interested to see it, though...
 
 
 
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