Repaying Student Loans 2009/10 guide discussion

Loki01

Hi there. How does it work with interest? I dont really get it? Do they change every year or do they stay the same? Thanks

Poolie

Hi Loki01

Interest is charged from the day of your first payment from SLC till the moment it is repaid.

Interest is charged on your account at a daily rate and applied monthly but shown on your statements annual if you are a graduate.

Interest information can be found here http://www.studentloanrepayment.co.uk/portal/page?_pageid=93,4774025&_dad=portal&_schema=PORTAL

Interest is charged at lower of either RPI at March each year (March's figure is usually announced each April) or Bank of England Base Rate + 1 %. The Secretary of State for Business Innovation and Skills can decide not to set an interest rate, as he did last year, which means the rate is 0%.

dancingdandare

hi, reading all the news about the possible changes to the student loan repayment system. They are talking about increasing the repayment threshold to 21k, which is not a bad thing, but then putting interest rates above inflation!! (which is not so good), in addition to that if you decide to pay it off early, you are penalised for doing so because your not paying off further interest.
Now i graduated in 2005 and I am wondering whether they are going to apply these changes, (specifically with regards to being penalised for paying back early) to loans which are already being repaid?
Any help would be appreciated, as everywhere it says don’t pay it off early but if they make these changes then it might be worth doing it again.

Poolie

I suspect the changes to the repayment system will not coming into effect till the start of the tax year either 2012 or 2013 mainly due to the work that would be required to get the system ready for the idea of no interest below a certainly threshold.

It all depends what David Willetts (Minister for Universities and SLC) says at 12:30 in the Commons when this is announced. Will certainly be worth watching.

Also depends if they decide to apply this to new students or post 1998 loans. This will not affect pre 1998 as they are controlled by a completely seperate agreement and would not make the government much money.

If this does go ahead then people need to consider paying down their loans now until the change over date therefore reducing the interest and keeping some money from the government

dancingdandare

Poolie wrote: »

I suspect the changes to the repayment system will not coming into effect till the start of the tax year either 2012 or 2013 mainly due to the work that would be required to get the system ready for the idea of no interest below a certainly threshold.

It all depends what David Willetts (Minister for Universities and SLC) says at 12:30 in the Commons when this is announced. Will certainly be worth watching.

Also depends if they decide to apply this to new students or post 1998 loans. This will not affect pre 1998 as they are controlled by a completely seperate agreement and would not make the government much money.

If this does go ahead then people need to consider paying down their loans now until the change over date therefore reducing the interest and keeping some money from the government

David willetts is speaking today in regards to the changes??? which already must be underway....true??

iz007

I'm delighted to say I paid off my student loan in full today. Made the final payment over the phone via the SLC. Am very happy, feel like celebrating! Does anyone know if you receive a closing statement? I'm guessing this won't come until the end of the tax year in any case.

Poolie

You won't receive a closing statement if you had been repaying through your salary until the return next year is received. Had you been warned that you may have 2 additional repayments taken from your salary and would need to claim a refund from SLC. You could request a letter confirming the balance has been cleared. Just make sure you keep your payslips and any correspondence you receive in case of any errors.

Poolie

dancingdandare wrote: »

David willetts is speaking today in regards to the changes??? which already must be underway....true??

The statement is a response to the Browne review which only completed in October. Any changes will require primary and secondary legislation to be placed before the house.

SLC will not have known what was going to happen until till todays announcement. They will have to sort out all the system changes that will be required.

Not impressed by the RPI (March figure) + 3% as the interest rate. Nothing like being shafted due to the lower interest we had received over the last 3 years. Time to start trying to pay it down any loans before the cap on additional repayments and charges kicks in. It may be £1000 or £3000 per annum and you would pay 5% charge on any repayment you make (on top of what SLC charge for credit cards).

Anybody else feel we are being shafted really hard for going to university and getting education to better ourselves? Shame we can't get a commercial loan on cheap interest terms so we could just pay it all off.

Oldernotwiser

It's only higher rate tax payers who'll be paying the extra 3% though.

dancingdandare

it says they will be bringing in these changes in the 2012/13 acedemic year, does this mean the changes to our loans with regards to interest rates and penilties for early repayment will come in then too???