Student Loan Mis-selling

melissa314

Hello everyone

Like many people, before i started university (in 2004) i applied for a student loan with the students loans company. Throughout the application process, i do not remember being made aware of future interest charges at all and whats interesting is i have asked so many other people who have taken out a student loan and they have all said the same thing.

Does anyone have any advice or experience on this?

Thanks
Melissa

tomtontom

You can always pay it back if you don't wish to incur interest?

owl_lover

OP won't have much choice but to be paying it back if the earn above the threshold.
I didn't start uni until 2010 so system was different but in the form that you sign before they will pay you it does talk about interest rates. You have no choice but to agree if you want the money so I doubt many people read the t&cs properly.
Interest rates are shocking imo (£2500 for me in 2 years) but I doubt there's much you can do.

Gaz83

I took my student loan out in 2007 when I started Uni. I was, and am, perfectly aware of interest charges. I don't know anyone who wasn't.

somethingcorporate

You're wrong.

Just because you don't remember doesn't make it true.

Pixie5740

What does the paperwork you have from when you took out the loan say about interest rates?

I took out a loan in 2005 and was aware of what the interest rate would be: BOE base rate + 1%. It's the cheapest money I ever borrowed.

Edit: Well except for 0% credit cards for stoozing.

Herzlos

owl_lover wrote: »

Interest rates are shocking imo (£2500 for me in 2 years) but I doubt there's much you can do.

On how much capital? If it's only £1000 loan it's a shocking rate, but if you borrowed £20,000+ then it's a pretty good rate.

As the above poster, the interest you pay is a tiny offset of the BOE base rate, so usually at about inflation and essentially free. It's certainly the cheapest long term credit you'll ever encounter. I think mine worked out at about 2% APR.

Edit: you won't get anywhere claiming you didn't know they charged interest, it's a loan, there's always interest (even if 0%). But if you want to cancel the loan they'll take the balance via debit card over the phone.

owl_lover

That was on 15000 and before I had even finished studying. I know it's not bad compared to commercial loans but it is supposed to be government subsided so I would expect it to be better.
I'm not complaining- I knew what I signed up for but I think interest should only be charged once you have graduated.

Pixie5740

What if you never graduate and drop out after a year or two?

Herzlos

owl_lover wrote: »

That was on 15000 and before I had even finished studying. I know it's not bad compared to commercial loans but it is supposed to be government subsided so I would expect it to be better.
I'm not complaining- I knew what I signed up for but I think interest should only be charged once you have graduated.

That's still only about £100/month in interest, which is half of what I'm paying for a commercial loan for £10k.

Why should the interest start from graduation instead of when the loan is taken out? Who's going to pay that shortfall (of potentially 5 years of inflation)?

As above, what happens if you don't graduate, is the debt frozen at 0% APR?

At least you only have to start paying it off once you hit an earnings threshold, so it's not as if you've got to make repayments whilst you're still studying like you would with any other credit system.

Pixie5740

Herzlos wrote: »

You still get to pay it back in the same way as everyone else.

Sorry, I was replying to owl_lover's suggestion that interest only starts accruing after you graduate.