When do Student Loans Co announce Interest Rate for 09/10 ?

argood

farso wrote: »

You talk rubbish. They are NOW based on RPI, but WERE based on CPI. I think I need the help of Zippy and George here. Please research before trying to argue a subject. Must we have inane people posting?

Link: http://www.moneymakingstudent.co.uk/2008/07/21/student-loan-interest-rates-to-fall/

Unfortunately your article is wrong. The rate for post-1998 loans has always been based on the RPI for March 31st each year. Before 1998 the rate was still RPI but it was for a different month.

By all means, check for yourself:

RPI Rates by month: http://www.statistics.gov.uk/StatBase/tsdataset.asp?vlnk=229&More=N&All=Y (Column CZBH)

Previous student loan interest rates: http://www.slc.co.uk/statistics/facts%20and%20%20figures/previous_interest_rates.html

atypical

morg_monster wrote: »

at the moment this is 1%+1% = 2% but is likely to go down again in the next few months until it gets to 0, then we will be on 0+1=1%

We probably will not get down to 1% as it's based on the highest base rate of a number of major banks plus 1%, not just the base rate. I very much doubt the banks will drop to 0%.

Numenor

atypical wrote: »

We probably will not get down to 1% as it's based on the highest base rate of a number of major banks plus 1%, not just the base rate. I very much doubt the banks will drop to 0%.

True, but if March's RPI figure is lower than 1% (which is highly likely!) then from September we'll have lower interest for a whole year.

Sol00

Farso I worked at the SLC. So I can assure you it's always been based on the RPI.

BigJonnyB

farso wrote: »

You talk rubbish. They are NOW based on RPI, but WERE based on CPI. I think I need the help of Zippy and George here. Please research before trying to argue a subject. Must we have inane people posting?

Link: http://www.moneymakingstudent.co.uk/2008/07/21/student-loan-interest-rates-to-fall/

Do you want to apologise for posting this when you are wrong?

HangTime

morg_monster wrote: »

there's not been a concrete answer about whether negative interest rates will be used or whether they will just peg it at 0%. I reckon they will peg it at 0 as negative interest rates are generally difficult to work with - their systems probably can't even handle negative percentages with their current programming.

From what I'm led to believe, there is currently no legislation relating to negative rates, just that the rate should be whichever is lower out of March's RPI figure or the range of bank rates plus 1%. So 'in theory' we should get charged negative interest if the RPI figure dips below zero for March. However, I suspect the reason there hasn't been a concrete answer is because there are probably some analysts feverishly beavering away on trying to find some loophole or way in which they can move the goalposts and prevent this from happening.

I'm sure if we do get negative RPI and SLC sets the rate to 0% or 0.001% or something, there'll be a big hoo-har about it. Some people will try and argue that people with student loans shouldn't be paid interest out of the tax payers pocket, but that is kind of missing the point. SLC was quite happy to sting us for 4.8% when RPI was high, so as the saying goes, if you live by the sword, you die by the sword.

You do have to worry a bit about what SLC's forecasts must look like for next year - presumably repayments will be hit slightly due to rising unemployment and of course their balance sheet won't grow as fast as normal due to a lack of interest accruing on existing debts.

Numenor

HangTime wrote: »

However, I suspect the reason there hasn't been a concrete answer is because there are probably some analysts feverishly beavering away on trying to find some loophole or way in which they can move the goalposts and prevent this from happening.

Indeed. I suspect that if they don't apply the negative interest, they'll have hundreds, if not thousands, of individuals either taking them to court or trying to have their student loans declared unenforceable. Doubtless they are all too aware of this, so will only refuse to apply it if they can find solid legal grounds to justify it.

argood

HangTime wrote: »

From what I'm led to believe, there is currently no legislation relating to negative rates, just that the rate should be whichever is lower out of March's RPI figure or the range of bank rates plus 1%. So 'in theory' we should get charged negative interest if the RPI figure dips below zero for March. However, I suspect the reason there hasn't been a concrete answer is because there are probably some analysts feverishly beavering away on trying to find some loophole or way in which they can move the goalposts and prevent this from happening.

I'm sure if we do get negative RPI and SLC sets the rate to 0% or 0.001% or something, there'll be a big hoo-har about it. Some people will try and argue that people with student loans shouldn't be paid interest out of the tax payers pocket, but that is kind of missing the point. SLC was quite happy to sting us for 4.8% when RPI was high, so as the saying goes, if you live by the sword, you die by the sword.

You do have to worry a bit about what SLC's forecasts must look like for next year - presumably repayments will be hit slightly due to rising unemployment and of course their balance sheet won't grow as fast as normal due to a lack of interest accruing on existing debts.

I love how you're trying to assume that SLC is some vindictive entity looking to spite you.

You do realise that SLC are non profit making? And that they don't "decide" the interest rate? The ultimate decision comes from the government. If you want to know what the rate will be then they'll be more than happy to debate it with you.

Also SLC didn't "sting" you with the 4.8% rate, that's what the RPI was for March and that's what the interest was. It's not even the highest rate. The highest was 9.8% in 1990. There isn't an upper limit for the interest because that wouldn't be a true reflection of the changing value of the loan.

If the interest rate goes negative then that's fantastic for all of us. If the government decides to set it at 0% then that's still fantastic for all of us.

HangTime

Hehe, I can assure you I have no such assumption - I simply think that any institution, public sector or otherwise, will try to meet it's targets. Just because an organisation isn't profit making, it doesn't mean to say that they don't have budgets or targets - they've even formally outlined this in the form of KPIs.

Maybe my use of the word "sting" has been misinterpreted - I'm not complaining, I was just pre-empting the possible stance some people might take with regard to the 'fairness' of students being paid interest on their debts should the rate go negative. I'm in agreement with you - the interest rate should be what RPI was in the previous March, as defined. I was simply trying to illustrate that the rate varies based on external indicators, meaning that we should stick to it without complaint regardless of whether it is 'high' or 'low'.

In fact, I must admit that until it was recently publicised a couple of months back, I wasn't even aware of the clause relating to the range of bank rates +1% - I didn't utter any complaint about being charged 3.8% interest at a time when the base rate was lower, because I totally accepted it as part of the terms of my agreement (or what I believed them to be at the time!). In fact I think I even posted on this forum musing over whether I should repay my loan because it was becoming tricky to find a net savings rate much higher than 3.8%. That of course soon became a moot point once the base rate dropped even further and dragged down the student loan
rate with it.

Numenor

argood wrote: »

Also SLC didn't "sting" you with the 4.8% rate, that's what the RPI was for March and that's what the interest was. It's not even the highest rate. The highest was 9.8% in 1990. There isn't an upper limit for the interest because that wouldn't be a true reflection of the changing value of the loan.

There weren't any Student Loans in 1990 though...

... although I realise that there's nothing to stop RPI going that high again in the future.