Student Loan interest rate 08-09??

guitarman001

Hi,

Just got a letter from SLC saying the interest on my loan was £537.04 raising my loan value from £14400.25 to £14937.29.....!!! This is 3.8%, and is stated as being from 01/04/2008 - 31/03/2009.

Is this correct - is that really the rate for that period? Check this out:

http://www.slc.co.uk/statistics/facts%20and%20%20figures/previous_interest_rates.html

Does this mean I'm on a mortgage stle repayment (I graduated from a 5 year degree in 2007)?

Jesus..... I know these loans are 'cheap' but it's like a noose around my neck. I have a fifth of my money in stocks (doing badly), a third in an ISA (losing value due to RPI) and the rest in a Lloyds vantage account. The vantage account is overspilling so I'm going to start paying the student loan off bit by bit, maybe £2-3k per year.

neas

Student loan interest is currently 0% until september this year where it will be the lower of the following:

1. The average of major banks general interest rate (currenlty 0.5%)
2. The RPI value (which i believe is now back to 3.8% or something)

I'd say if RPI rises and interest rates rise then yea paying off student loan might be a good idea.. otherwise maybe save for a house?

guitarman001

Thanks - but am I correct in saying that the interest rate for 08-09 was really 3.8%? Don't want to be conned here and SLC is always busy when I phone up. Thanks in advance!

CLAPTON

no

your interest statement covers the tax year april 2008 to april 2009

the interest charged however change in september each year

so from september 2007 to august 2008 you will be charged one rate.. I think 4.8% which was rpi inflation in march 2007
and from september 2008 to august 2009 you were to be charged another rate ..I think 3.8% which was rpi inflation in march 2008







..I'm not sure about the rates however... what exactly does your statement say?

Poolie

On the back of the statement there will be a list of the interest rates and dates these rates applied. You are not an old style repayer as you will be paying back via your salary deductions.

Between 1st April and 31st August interest was 4.8%
1st September till 4th December was 3.8%
4th December till 8th January was 3%
9th January till 5th February was 2.5%
6th February till 5th March was 2.0%
6th March till 31st March was 1.5%

So you can't just do a general calculation to work out the interest rate as it has changed so many times during the tax year. You would need to work out the daily rates for these and then calculate the balance at the end of the each day to workk out if the interest was correct on the statement.