SLC rates up- oh dear

surfcat

Well,

March on March annual RPI figures are out today: 4.8%.

So Sept2007-Aug2008 SLC interest rate will be 4.8% this year.

Is it still worth holding the loan in savings?

SC

Glasgow_Paul

The rate of 4.8% is not guaranteed till the Secretary of State for Education and Skills (or the Higher Education Minister Bill Rammell) makes an announcement to Parliament or lays down a regulation to change the rate.

BUT - it does mean the rate has doubled from 2.4% to 4.8% due to inflation!!!!

tr3mor

Why would a figure for March affect something happening in September?

By then energy prices should have tumbled and inflation should be much lower.

surfcat

tr3mor wrote: »

Why would a figure for March affect something happening in September?

Because the SLC interest rate is, and has always been, based on the March year-on-year RPI figure!!! It specifies this somewhere on the slc website.

Compare the March % increase values in these tables:
http://www.incomesdata.co.uk/statistics/rpi_98_00.htm
http://www.incomesdata.co.uk/statistics/rpi_01_03.htm
http://www.incomesdata.co.uk/statistics/rpi_04_06.htm
So (starting 98): 3.5, 2.1, 2.6, 2.3, 1.3, 3.1, 2.6, 3.2, 2.4

with the SLC interest rate table here:
http://www.slc.co.uk/statistics/facts_figures.html
which is (starting 98-99): 3.5, 2.1, 2.6, 2.3, 1.3, 3.1, 2.6, 3.2, 2.4

Glasgow_Paul

Exactly Surf Cat!

It basically takes so long due to the Government needing to make the announcement and regulation change.

lellie

surfcat wrote: »

Because the SLC interest rate is, and has always been, based on the March year-on-year RPI figure!!! It specifies this somewhere on the slc website.

Compare the March % increase values in these tables:
http://www.incomesdata.co.uk/statistics/rpi_98_00.htm
http://www.incomesdata.co.uk/statistics/rpi_01_03.htm
http://www.incomesdata.co.uk/statistics/rpi_04_06.htm
So (starting 98): 3.5, 2.1, 2.6, 2.3, 1.3, 3.1, 2.6, 3.2, 2.4

with the SLC interest rate table here:
http://www.slc.co.uk/statistics/facts_figures.html
which is (starting 98-99): 3.5, 2.1, 2.6, 2.3, 1.3, 3.1, 2.6, 3.2, 2.4

It's a really stupid system though..

aqueoushumour01

if real rates really were 0%, they should index to HICP as this represents changes in the cost of living. Silly me for not changing my savings account. I'm paying more in interest than I'm receiving at the mo and it looks like it's going to get even worse - Out of the country so I'm stuck for another couple of months yet

newfoundglory

Hmmm, this is worrying news, since i'm holding about £11,500 of my student loans in savings. But, I have managed to shift mine into ISAs.

If it is set at 4.8pc, then you'd need to be making 6pc gross to break even at 4.8 net after tax - unless you get it into a high rate ISA. Having said that, if the BoE sticks up interest rates by 0.5pc this month, we might hit a 6pc base rate by the end of the year!!!

lellie

There are a couple petitions on the petition pm site to get them to use the CPI rather than the RPI but they don't seem to have taken off. If stupid students realised this was actually a problem, where as the interest at the end of the year thing isn't even right then something might get done.