Student loans interest rate to fall due to BoE cut

rb10

Another reference which I think puts it across very clearly. An MP asked about the use of the RPI for Student Loans, and this is the answer by Bill Rammell, of the Department for Innovation, Universities and Skills:

From 1998/99, income contingent repayment (ICR) loans replaced MS loans for new borrowers. These are ‘low interest loans’ exempt under section 16(5) (b) of the Consumer Credit Act 1974. Borrowers only repay when they earn more than £15,000 a year, at an affordable rate of 9 per cent. of earnings above this threshold. Interest is calculated in accordance with the Education (Student Support) Regulations 2007, as amended, and is the lower of March’s RPI or 1 per cent. above the highest of the base rates published by the banks listed in Regulation 4 of the Consumer Credit (Exempt Agreements) Order 1989.

From House of Commons Hansard Written Answers for 09 July 2008 (pt 0036) at http://www.publications.parliament.uk/pa/cm200708/cmhansrd/cm080709/text/80709w0036.htm

ScottyBoy_2

Great News, at last a little benefit from a rate cut for me :beer:

joe06

so are we looking at an interest reate of about 3%?

if the BoE drops to 0% as predicted, what will we be paying on our loan? 1%?!

ashapala

And it's now happened :beer:
http://www.nus.org.uk/en/News/News/Student-loan-interest-rate-likely-to-drop/

melancholly

just to confirm the article states it's been reduced to 3%

rb10

Wow, great news! Many thanks to ashapala and most especially to Compound for bringing this to our attention!

Just for info, the 'official' site explaining it is at http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,3866911&_dad=portal&_schema=PORTAL , in addition to the NUS link in ashapala's post above.

BBC news site does not appear to have picked up on it yet.

HannaB

Wow, it means my payments might actually start to make a dent in the monetary amount and not just pay off the interest!!

Chris2685

Finally some good comes from these interest rate drops

Rikki

melancholly wrote: »

does that mean that they'll change it from now, or will this only apply when they set the rate for next year?

The rate is 3% effective from the 5th December.

Annual review is in March as normal.

rb10

Rikki wrote: »

The rate is 3% effective from the 5th December.

Annual review is in March as normal.

... but depending on base rate changes in the coming months, the rate can still change (up or down, but no higher than 3.8%) before the next "normal" change date of 1st September 2009.