Student Loan Interest rates - Present and Future loans

crumpsall

[FONT=&quot]The current within-coalition negotiations raise some important points of principle. As far as I have been able to glean, the current favourite for raising additional revenue appears to be a higher (‘commercial’) rate of interest on student loans. What is so far unclear is whether such a scheme would only be applied to new loans or whether it could be applied retrospectively to existing loans.[/FONT]
[FONT=&quot]The basis of the contract for my younger son was his application (of which I have a copy) for a loan commencing in October 2006. This application declaration, which he was required to sign, makes no mention of interest payments, but paragraph (b) states:- [/FONT]
[FONT=&quot]" I have read and understood the booklet 'Student Loans: A Guide to [/FONT][FONT=&quot]terms and conditions[/FONT][FONT=&quot]"'. That booklet says on page 10 under the heading Interest:-

"Although student loans are contracts which can be enforced by the civil courts, they are not profitmaking loans. The Government subsidises the actual cost of interest on the loans, so they do not attract the same rates of interest that you would be charged if you were to take out a loan from a bank or building society. However, to make sure that all borrowers pay back the same amount that they borrowed, the Government has to keep the value of what is owed in line with the general rate of inflation. This is done by working out the rate of inflation each year as defined by the Retail Prices Index (RPI) and fixing the interest charged to that rate. The aim is to maintain the value, in real terms, of the outstanding amount of the loan. This means that however long it takes you to repay your loan, you will repay no more, in real terms, than you actually borrowed."
[/FONT][FONT=&quot]
[/FONT][FONT=&quot](I have emboldened parts of the above text.). The previous Government (with the acquiescence of both the Conservatives and Lib-Dems) introduced regulations in 2009 which allowed them to avoid following the (contractual – see above) negative RPI trend by declining to set an interest rate (effectively making it 0% instead of -0.4%).[/FONT]
[FONT=&quot]Question:- Having broken the contract once, what is to stop the Government doing it again and imposing additional retrospective conditions (‘commercial’ rates) to existing loans? [/FONT]

melancholly

no idea what will happen..... not sure i like any option of the ones on the table.... there will be big changes in universities across the board in the next few years. it's a scary time for all involved.

hellokitty08

Surely they cant apply them to exisiting student loans? That would just be mental! I dont think I am ever going to pay mine off anyway, but extra intrest would be extreamly depressing!