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MSE News: Student loan interest rate could fall for hundreds of thousands

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MSE News: Student loan interest rate could fall for hundreds of thousands

edited 17 April 2012 at 6:06PM in Student Money Saving
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Former_MSE_HelenFormer_MSE_Helen
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edited 17 April 2012 at 6:06PM in Student Money Saving
This is the discussion thread for the following MSE News Story:

"March's inflation figures released today give a better idea of how much interest graduates will pay on loans"
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  • N1AKN1AK Forumite
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    As someone who got a comparatively small loan (no fees) and is only getting charged 1.5% at the moment I find the kind of debts we're putting on students now unacceptably costly.

    Based on current loan sizes and interest rates you have been charged ~£2,500 before you've even left university and then face having another ~£1,000-£1,500 added each year afterwards.

    Given the low interest rates at the moment anyone whose parents can are in a position to lend them the money, give them the money or even re-mortgage on a fixed rate to fund it would help their children avoid a huge debt.
    Having a signature removed for mentioning the removal of a previous signature. Blackwhite bellyfeel double plus good...
  • edited 17 April 2012 at 1:27PM
    setmefree2setmefree2 Forumite
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    edited 17 April 2012 at 1:27PM
    September 2012 starters
    Those who start university from September 2012 will pay interest on the loan at RPI + 3% from when they take out the loan.
    It is unclear which RPI figure will be used, though it is likely to be from the previous March, therefore the rate is likely to be 6.6% from when they first draw the money, though it will change in subsequent years.
    Totally unbelievable that we don't know which RPI figure is being used when students are already applying for these loans :cool:


    BY THE WAY
    Does anybody at MSE Towers know if the £21k and £41k thresholds are going to rise annually for 2012 students because an SLC employee has adamantly told an MSE user that they aren't but MSE are informing everyone that they are? shrug_n.gif It would really helpful if someone could say something about this one way or the other....

  • melanchollymelancholly Forumite
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    setmefree2 wrote: »
    BY THE WAY
    Does anybody at MSE Towers know if the £21k and £41k thresholds are going to rise annually for 2012 students because an SLC employee has adamantly told an MSE user that they aren't but MSE are informing everyone that they are? shrug_n.gif It would really helpful if someone could say something about this one way or the other....
    all i have ever managed to find are generic statements that the thresholds will increase in line with earnings from 2016. i'm honestly not sure the specifics will have been decided yet - it wouldn't remotely surprise me if they hadn't thought about it much!
    :happyhear
  • setmefree2setmefree2 Forumite
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    - it wouldn't remotely surprise me if they hadn't thought about it much!

    Has it always been like this or is it just this govrnment that are inept - I'm not surprised they are 10+ % behind in opinion polls tbh :(

    It would be great to get some feedback from MSE on the thresholds - even if its just to say they don't really know if the thresholds are rising.

    As head of the Independent Student Finance Taskforce ML said
    Students need to know the facts, not the politics
    Well how about a few facts please:D

    Are the thresholds rising with inflation or not?

    If the thresholds are not rising how (seriously) does ths impact the MSE student loan calculator?

  • LokoloLokolo Forumite
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    setmefree2 wrote: »
    If the thresholds are not rising how (seriously) does ths impact the MSE student loan calculator?

    Massively because the amount paid back with rising wages is offset (even slightly) by the rising thresold, limiting the increase in the amount paid back each year.
  • angukanguk Forumite
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    N1AK wrote: »
    As someone who got a comparatively small loan (no fees) and is only getting charged 1.5% at the moment I find the kind of debts we're putting on students now unacceptably costly.

    Based on current loan sizes and interest rates you have been charged ~£2,500 before you've even left university and then face having another ~£1,000-£1,500 added each year afterwards.

    Given the low interest rates at the moment anyone whose parents can are in a position to lend them the money, give them the money or even re-mortgage on a fixed rate to fund it would help their children avoid a huge debt.
    My daughter is starting university this September, she's just applied for her student loans. It's bad enough that her generation now have the high fees but now they add on the higher interest rates too. And we're not in a position to help her out. :(

    My generation were so lucky and I don't think we appreciated it, no fees, no loans and they even gave you grants too!
    Dum Spiro Spero
  • setmefree2 wrote: »
    BY THE WAY
    Does anybody at MSE Towers know if the £21k and £41k thresholds are going to rise annually for 2012 students because an SLC employee has adamantly told an MSE user that they aren't but MSE are informing everyone that they are? shrug_n.gif It would really helpful if someone could say something about this one way or the other....

    Hiya,

    We have re-checked this info with Department for Business (whose policy this is) and the info in our article is right. From 2012, every new student will start repaying from earnings of £21,000, and that threshold will rise with inflation from 2017.

    Many Thanks

    Dan
    MSE Web Editor, mainly responsible for looking after, and keeping up-to-date, ‘hard-core’ financial articles such as credit cards, savings and loans.

    If you spot a rate change that we haven't already mentioned or added into articles or tips, Please send me a PM about it




    Don't miss urgent MoneySaving, hear first by getting Martin's Money Tips Free E-mail at www.moneysavingexpert.com/tips
  • edited 17 April 2012 at 7:15PM
    setmefree2setmefree2 Forumite
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    edited 17 April 2012 at 7:15PM
    MSE_Dan wrote: »
    Hiya,

    We have re-checked this info with Department for Business (whose policy this is) and the info in our article is right. From 2012, every new student will start repaying from earnings of £21,000, and that threshold will rise with inflation from 2017.

    Many Thanks

    Dan

    Thank you so much :D Good news or "not quite so bad" news :)

  • setmefree2setmefree2 Forumite
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    N1AK wrote: »
    Given the low interest rates at the moment anyone whose parents can are in a position to lend them the money, give them the money or even re-mortgage on a fixed rate to fund it would help their children avoid a huge debt.

    I don't think that's what MSE would recommend. See the following:)

    http://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes

  • setmefree2setmefree2 Forumite
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    'Could be deterrent'
    Martin Lewis, creator of MoneySavingExpert and head of the Independent Taskforce on Student Finance Information, says: "At 6.6%, 3% above RPI inflation, while they're studying, for the first time student loan interest is at the same rate as the best buy commercial lending.
    "One of my primary objections to the new system is that for the first time we are not just charging people for their education, but charging them for the financing of their loans too.

    "The worry is the high headline rate of interest is psychologically damaging and acts as a deterrent.

    I don't really understand why the government feel the need to charge such a high rate of interest whilst students are studying??? They must want to deter students from going to uni or they are trying to tempt parents to pay up front???

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