Should I Pay Off My Student Loan? 2008/09 article discussion

neas

they'll prob decide to shove it back to cpi like when they moved it from CPI (2%) to RPI (4.8%)

Now they'll reverse it lol.

Chris2685

neas wrote: »

they'll prob decide to shove it back to cpi like when they moved it from CPI (2%) to RPI (4.8%)

Now they'll reverse it lol.

I was thinking that... I think there will be SERIOUS uproar if they did that again just to benefit themselves!

BigJonnyB

Yep - especially given the official government response to the cpi/rpi issue here:

http://www.number10.gov.uk/Page13844

"Viewed over a period of several years, the student loan interest rate will be equivalent to the rate of inflation; but with a time lag. To ensure that this remains the case we need to use the same measure of inflation consistently over time...

We believe it is right to use the same measure of inflation consistently across the years, and not to make changes simply because one measure is lower (or higher) at a particular point in time."

According to their response, student loans have always been based on RPI...

Lokolo

Actually anothter 2 months, the latest inflation figures were for January.

argood

To clarify, the student loan interest rate has always been based on the RPI figure for March 31st each year. CPI has never been used.

The recent changes in the interest rate have come about due to a clause in the regulations for the post-1998 ICR loans that state the interest must be the lower of the RPI at March 31st or the highest base rate of a group of banks plus 1%. That's why the rate has dropped in December, January and February recently.

A full list of past interest rates can be found here: http://www.slc.co.uk/statistics/facts%20and%20%20figures/previous_interest_rates.html

The rates on that page stop at 4.8% for 07/08.
From September 2008 the rate dropped to 3.8% for both styles of loan (newer ICR loans and the defunct Fixed Repayment or "Mortgage Style").
The rate for ICR rates dropped in December to 3%, then in January dropped to 2.5%, and then 2% in February, in line with the changes to the base rate.
The Mortgage Style loans are fixed at 3.8% until September 1st 2009 when they will change again to reflect the RPI at March 31st.

barny_100

neas wrote: »

RPI is down to 0.1%

One more month until the entire years worth of interest rate is set . IF it stays at this rate or goes below 0 i'll be happy... as that means no interest accrued for one year. So Get paying down your loans .

Actually shouldn't you save and put it in the best bond/ISA/saving account you can get until the RPI raises again. Then just draw out the savings and make a lump sum payment?

barny_100

BigJonnyB wrote: »

RPI should have gone negative by March, which means they will be paying us. No way out of it for them...they made the rules

JB

I know in theory it makes sense but does anyone know if this could actually be the case?

Oldernotwiser

Chris2685 wrote: »

I was thinking that... I think there will be SERIOUS uproar if they did that again just to benefit themselves!

Just to clarify; when you say "themselves", that's US you're talking about!

Chris2685

I have nothing to do with the student loans company :P
The only thing that directly affects me is my student loan interest rate

Oldernotwiser

Chris2685 wrote: »

I have nothing to do with the student loans company :P
The only thing that directly affects me is my student loan interest rate

I don't understand your post; perhaps you've misunderstood mine?