Student Loan interest DOUBLED

Christa1

Some of you may have seen Your News yesterday( Sky News) from Durham Uni where many students are up in arms because the SLC ( govt backed) has doubled the interest from last year on all student loans. Most of the students weren't even aware that this was the case. The SLC say it's because the RPI figure has doubled. The students suggested that the CPI( more regularly used now, which is less as it doesn't include mortgages) be used instead. A spokes man said that RPI is what is used and basically that is that, yet it's interesting to know that Govt payrises and many( as is mine in the private sector) are only attracting pay rises using the CPI figure. Seems to me this government wants it both ways. Anway the Dutrhan Uni students have a website so I understand for other students to offer support.

Lokolo

Also you should notice how its based on the March figure, which was the highest point during the year. (because thats realistic! Take a bloody average you morons!)

However, luckily I am still earning more with the money in my ISA!

welf_man

This has come up a number of times recently. The method of calculating interest was contained in the primary enabling legislation and therefore would take a further Act of Parliament to change.

It is possible that such a change could be tacked on to other legislation, or taken as a Private Member's Bill, but as an Act often takes several years to pass, it's hardly worth it - student funding changes every year anyway!!

Mel.

pinkshoes

I wonder how many people will never pay back their loan though?! You need to earn £22.6k to just pay off the interest now!!

If you start earning £23k and get inflation pay rises every year, then it would take 19 years to pay off a £15k student loan! Not to mention any woman (or male) who takes a career break to have kids, or then goes back to work part time...! Or lives in another country where cost of living and thus wages are much lower!!

They (the government) really haven't thought this loan thing through!

Sigur_2

pinkshoes wrote: »

I wonder how many people will never pay back their loan though?! You need to earn £22.6k to just pay off the interest now!!

If you start earning £23k and get inflation pay rises every year, then it would take 19 years to pay off a £15k student loan! Not to mention any woman (or male) who takes a career break to have kids, or then goes back to work part time...! Or lives in another country where cost of living and thus wages are much lower!!

They (the government) really haven't thought this loan thing through!

I hope you're not being serious with that stupidly flawed logic.

studentsaver166

Ok, I didn't understand a lot of the technical stuff about RPI and stuff, I'm not very bright when it comes to loan-based and interest-based topics!! But I am a final year student at uni so obviously I'm a little concerned about this whole interest rise thing. Can someone put it in very simplistic terms for me please? I know you don't start paying back the student loan until you're earning above £15k a year (which is good news for me seeing as I'm going into acting and will therefore be poor for the rest of my life!!) but is it now going to cost us a hideous amount instead of a negligable amount? Cos I was always under the impression that student debt was a pretty much the safest debt you could have. Is that no longer the case?
Suzie xx

pinkshoes

When you earn over £15k, they take 9% from anything you earn over this amount.

The interest rate on the loan is now 4.6%, which means that for a £15k loan, you'll be paying around £57.50/month interest on it!

Someone earning £22k will pay (£22k - £15k)* 9%/12 months = £52.50/month off their student loan, but then don't forget the £57.50 interest they just added on... so your loan actually just went UP by £5!!!

This is why you now need to earn £22,666 just to pay off the interest. No one in their right mind would pay over the minimum amount, as you can earn more money investing your cash in an ISA! There is no financial incentive to pay off a student loan.

The good news is that the loan is cancelled after 25 years...

Sigur wrote: »

I hope you're not being serious with that stupidly flawed logic.

er... and how is it flawed?!?! You can't just make statements like that and not back them up with evidence!!

melancholly

might be worth looking through these threads - lots of info (and arguements too ). quite a lot of people have started threads discussing it over the summer - i have to say durham uni seems to be quite late in their response, but i guess they were waiting until term started.....

http://forums.moneysavingexpert.com/showthread.html?t=489676&highlight=student+loan+interest+rate
http://forums.moneysavingexpert.com/showthread.html?t=483120&highlight=student+loan+interest+rate

delderek

Lokolo wrote: »

Also you should notice how its based on the March figure, which was the highest point during the year. (because thats realistic! Take a bloody average you morons!)

However, luckily I am still earning more with the money in my ISA!

The March figure of 4.8% is 'a bloody average'. The RPI percentage is calculated over the most recent 12 months i.e. over the last year.

I am surprised that this does not appear to have been conveyed clearly anywhere on this website. :eek:

Also, it is always based on the March figure - for fairness and consistency.

Happy to set the record straight!

Bamber19

I've got to say none of us were complaining when it was low, I don't recall one person questioning the fact they use the March figure at that point. In any case as has been pointed out on this thread you need to be earning 23k now to start paying it off and the sad fact is that with so many people doing worthless degrees with no related employment opportunities or the dreaded over-subscribed Psychology degree many people are going to graduate and go into jobs that pay about half that, working alongside people they went to school with who have three or four years of experience in the job and have been earning money instead of debt over that time. Most complaints come from the fact people just haven't read information and don't want to admit that it's their fault. If you didn't know the interest rate for the loan came from the RPI then you should have done, and if you didn't expect the rate to fluctuate then, again, you should have.

Infidel

The best money saving (and lifestyle advice) i can offer is leave the country boys and girls.