Student loan interest rate??

adamt

i started uni in september 2005, and took out a maintenance student loan
= £2490

and in september 2006 took out a maintenance and tution fee loan
= £2560 + 1200
= £3760

Anyway, looking at my end of first year annual statement it states i am paying after the whole 2490 has been recieved, £6.78 interest, Per Month.

now i have recieved a further 3760, which totals to £6250.
So im guessing my interest im paying per month is approximately £12.
and in my final year ill be recieving a further 3590, so in total
= 9840
so again im guessing ill be paying an interest of £20ish per month, till i pay it off?

I spoke to the student loans company a while ago regarding this and i remember they say you pay at the rate of inflation.

However, i have put all my maintenance loan (what i have left after first year tution fee = £5,000) into an ISA savings account, and im earning £20 a month with this amount.

It just seems alot to be paying £12 in interest at inflation rate, yet im getting just £20 from a natwest cash isa account?

Is this right?

does anyone know any better isa accounts that can give me a higher safe interest rate/return?

Thanks

Gemmzie

What's the interest rate on your ISA and (seemingly odd question but there's a good reason) how old are you?

adamt

heres the isa i signed up to 2-3years ago
http://www.natwest.com/personal02.asp?id=PERSONAL/SAVE_AND_INVEST/ISAS/MINI_CASH
it just says up to 6%

and im 21

Gemmzie

It's only 6% if you have £27k+ in it, the max you could have in it is £9k so that means 5.5% if you're in that £9k bracket, 5.35% if not.

You'd be better off changing ISAs, have a look at Martin's article here: http://www.moneysavingexpert.com/savings/best-cash-isa

And you can get 1% a year, which adds up

HTH

adamt

thanks gemmzie,

with regards to the interest thats accumilating, will this still be so high once ive graduated? does it only reduce when i pay it off, cos it seems as if its going to keep on increasing till i graduate.

this amount they are charging me seems way too high for a student loan, or is this what everyone has to be charged?

doesnt seem like inflation? or is it?

e.g. £5,000 would not increase in value by £12 in a month?

adamt

ive read the article, and ns&i can offer 6.3%, which is 0.8% better than what im currently getting.

does anyone know the calculation for what i would recieve per month/annum with £5,000 at 6.3% , maths is not my strong point? :S

i do appreciate as the sum increases the amount i would gain on interest would too .

jayjayuk

i dropped out of uni.....

working at the moment getting debt free tring to get back.....

i had a letter from the slc asking for 2k

so i phoned up and asked how am i gonna ay 2k????

they said as long as i pay £5 or more per month to them it will be ok
and intrest is 4% a year??? :S it works on inflation apparantly?

melancholly

i think ns&i don't let you transfer any existing isas in, so you have start from scratch - at least when i looked into changing my isa those were the rules so it's worth double checking.

jayjayuk - inflation, as measured by RPI, is about 4% - this webiste shows how it has varied over the last two years and defines RPI and CPI.
http://www.statistics.gov.uk/cci/nugget.asp?id=19

rainbowtrout

Inflation (RPI) is not the same thing as Bank of England base rates so in theory it is possible for RPI to be HIGHER than the gross interest you can get in a savings account.
Currently we are not quite there yet but last year has been bad for inflation. If BoE are doing their job the interest should fall this year as RPI has been lower recently.
As for your other question, I'm pretty sure they carry on charging you 'inflation-linked' interest when you graduate as well, i.e. they will not freeze your loan amount. They only stop charging interest when you've paid it off completely.

On the bright side, if you can't stomach this amount of debt you will almost certainly never be brave enough to get a mortgage.