Student Loan Interest Rate Discussion

Lokolo

birduk wrote: »

There is, it is this 'mixed basket of bank interest rates plus 1%'.

If inflation sky rockets so will the base rate. The base rate is meant to counteract inflation. Hence when its low, the base rate comes down, and vice versa.

marshall2k

Hi James,

I think the wording of your petition sort of misses the point.

The current student loan interest rate is 1.5%, but it is meant to be linked to RPI inflation which is negative, it has gone down slowly from 4.50%, but stopped there, this petition is to show that students are not happy that it is not decreasing even though inflation is, it is meant to go up at the same rate that prices do, prices are decreasing, the loans should decrease.

The student loan rate is applied in September based on the previous March RPI figure. The only reason we have seen a reduction in rate from [STRIKE]4.5%[/STRIKE] 3.8% last September to 1.5% now is because the base rate has been reduced. Loans started since September 1998 are classed as "low interest" and so cannot be more than 1% above the base rate.


The drop we have seen in rate is not due to RPI, but the base rate. If the base rate was to be put up tomorrow, our loan rate would increase.

[STRIKE] If it was raised to less than 3.5% we would pay base rate + 1%. If it was raised to 3.5% or more, we would pay 4.5%, based on March 2008 RPI figure.
[/STRIKE]
[EDIT] I got the March 2008 RPI figure wrong (thanks Poolie)

If the base rate was raised to less than 2.8% or less then we would pay base rate + 1%. If it was raised to 2.8% or more, we would pay 3.8% based on March 2008 RPI figure.

Poolie

marshall2k wrote: »

The drop we have seen in rate is not due to RPI, but the base rate. If the base rate was to be put up tomorrow, our loan rate would increase. If it was raised to less than 3.5% we would pay base rate + 1%. If it was raised to 3.5% or more, we would pay 4.5%, based on March 2008 RPI figure.

Marshall,

I think you have missed the point here. The current rate is either RPI from March 2008 (3.8%) or Bank of England Base Rate + 1%.

If base rate rose to 2.5% then student loans would be 3.5%

If base rate rose to 3% then student loans would revert back to the March 2008 RPI figure rather than 4%.

Therefore the highest bank of england base rate can before the RPI figure is used again is 2.75%. This would mean student loan rate would be 3.75% below the 3.8% RPI figure.

marshall2k

Ahh sorry, I had the March 2008 RPI figure wrong, I thought it was 4.5%. You say what I said, but with the correct RPI figure.

My main point still stands, the reduction in loan rate so far is not due to changes in RPI figures, it is due to base rate changes.

Poolie

The government should have kept to the terms that we signed.

Interest rate linked to March RPI figure held till September.

The interest rate going negative should not be allowed to affect the repayment threshold. It has never done so up each year so far as the interest rate increased and decreased each year.

rb10

Poolie wrote: »

The interest rate going negative should not be allowed to affect the repayment threshold.

It's a complete load of rubbish that they've just said to make it look like they are doing something to help those with student loans.

marshall2k

Exactly Poolie, the petition should simply state that!

I'd quite like a copy of the T&Cs I signed from 2005-2008. Anyone got them?

BruceyBonus

marshall2k wrote: »

I'd quite like a copy of the T&Cs I signed from 2005-2008. Anyone got them?

The earliest I have is 08/09. They seem pretty much the same as 09/10, so I doubt the wording has changed much since 05/06. That is assuming they haven't changed the wording of 09/10 since I last looked.

Taiko

I have all the old T&C's, or can at least obtain copies of them. Will see what I can rustle up.

littlemissmoney

Had the Government used a negative RPI rate to calculate this, the threshold would have reduced and borrowers would have started repaying earlier and ended up paying more. Setting interest at 0% has prevented this from happening.

Source:
http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,3866911&_dad=portal&_schema=PORTAL

What a load of nonsense! You would pay more per month but would pay LESS over the lifetime of the loan.

Also, surely the threshold is also in the t&cs so they couldn't just go reducing that, can they?