Calculating student loan interest

incubus1980

Hi,

I'm trying to work out how the student loan company calculate my interest for a year. For example: my balance on the 01/04/2004 was £11102.52. The interest rates where 01/09/2002-31/08/2003 => 0.003540597 and 01/09/2003-31/08/2004 => 0.008351932 (daily rates).

I worked out the number of days each month and multiplied this by the amount of interest per day and added it to the total. e.g. for April 2003 (30days) I worked out my interest for that month would be £11.79.

For the end of the 03/04 year I had interest calculated at £260.38 but on the statement it has £247.93. My credits for the year where £969.00. Am I working the interest out correctly and are any of my payments deducted throughout the year and hence the interest should drop each month?

Thanks for any info you can provide.

John

xrjtg

I don't know the details, but I'd be amazed if they continued to charge interest until the year's end on amounts that you've already paid off. There are small variations in how interest rates can be calculated, but your method won't be a million miles off, which fits with the fact that you've got roughly the right answer. The exact figure could vary depending on when payments you've made reach the account, so I wouldn't worry too much about calculating the exact figure yourself; it might be useful to have a ballpark estimate, but I'd be happy to leave the calculation to the SLC.

MrsManda

They do all the calculations once they get the information at the end of the financial year but the payments creditted to the month you made them so the interest you pay each month will change but your calculations aren't bad if you're just looking for a ballpark figure

incubus1980

Hi,

thanks for the replies.

The reason I wanted to know how to work it out is because in 2006 a whole years worth of my payments disappeared. HMRC didn't pass on any of my payments to the SLC. It took until December 2010 to get the payments credited to my account after sending in my P60 (Which I had to do about 10 times before someone actually got it!) for that year showing I had paid them. SLC say they will put the payment in the system as if it had been credited in 2006 but they won't send me out any more statements for the years after showing how the interest would have changed and since i'm due to pay it off in the next few months I wanted to make sure I have the right amounts (and not paying interest for the payments I did actually make in 2006 and subsequent years).

Also, HMRC give my payments at the end of the tax year in one lump sump. Do SLC work out how much a month I would have paid and reduce the amount each month based on this payment?

John.

Poolie

When SLC say they have credited it to your account it means the details have been recorded on the system. Until they get the actual information confirming your P60 from HMRC then you will NOT get a statement. Once the information is received and applied to the system from HMRC, the system will generate a statement for 2006 and readjust the interest for the future years, however I suspect it will not generate revisited statements as it is only the 2006 information they have received and it is the tax year which is the trigger for generating statements.

If you believe you are close to repaying, give SLC a call and ask them to use the predictor to work out how close you are. You will need to make sure you have your P60's (if any details are missing apart from 2006) and your payslips for the current tax year.

When SLC receive the payments file from HMRC, they divide the amount you have paid by 12 to give a rough monthly figure. Any left over pennies are added to the first month. SLC do not know how much you would have paid via PAYE on a month by month basis as that level of detail is not recorded.