Interest Charges

Unhappy_Graduate

Banks & Building societies aren't allowed to do this on Mortgages / Loans - so why are Student Loans Company?

Deductions by HMRC are made monthly from borrowers - however this money is paid to the Students Loan Company once annually.
This results in borrowers being charged interest on their full balance for a year, before the balance is reduced. If the deductions were made monthly (as paid) the borrower would be better off.

silvercar

My understanding is that the borrower is only charged interest as if the payments are passed over monthly.

Lokolo

Wow. You signed up to MSE to only post this?

As silvercar says, even though the payments are only recalculated once a year after HMRC passes them on, they are then processed and backdated as though they were paid monthly.